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Abstract

Microfinance, a recently coined vocabulary in rural finance literature, refers to small-loan commercial banking facilities created specifically for meeting the financial needs of the poor. This financing program is different from the traditional microcredit program in that the former has profit motives, while the latter being non-profit NGOs, do not. Because of this commercial feature, microfinance programs are susceptible to criticism. To undermine the severity of this criticism, suggestions are being made to treat them as social-consciousness-driven capitalist ventures and their owners as social entrepreneurs. This paper investigated this overwhelming proposition, particularly in the light of Adam Smith's moral and economic theories. The analysis seems to suggest that the proposition has difficulties both from theoretical and policy-making perspectives.

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