In order to combat poverty and advance economic opportunity, microfinance institutions (MFIs) play a critical role in providing financial services to the disadvantaged. Macroeconomic variables, institutional concerns, and economic structure all have an impact on how well MFIs perform. Despite the benefits of microfinance, such as empowering women and generating money, there are still obstacles to overcome, such as poor people's limited access, high transaction costs, and sustainability issues. Adverse selection and moral hazard problems have been addressed with innovative methods like cooperative lending. The balance between social welfare and business, gender relations, and exclusion of the most disadvantaged are still issues that worry people. Overall, microfinance can be a useful tool for reducing poverty, but its application and effects must be carefully considered.

Microfinance, Financial Inclusion, Poverty Reduction, Group Lending, Sustainability, Empowerment.