The detection of the essential role of saving and credit is one of the advantages of microfinance. With the poor people, saving money is an important thing to do. Actually, in case of emergency situation such as accident, illness, beside of insurance or social welfare, saving money is still needed for everyone, not only for poor people. But with the existence of the microfinance, saving money becomes easier for poor people. One of the advantages of microfinance that relates to saving money is allow poor people to borrow money. For overcoming of poverty, poor people need rights to borrow money and invest them for economic purposes, but with a little salary, poor people have limited access to banks or other formal financial institutions. According to Båge http://www.ifad.org/events/microcredit/op.htm, from the 1990s, the number of poor people who use the microfinance networks has increased. Both credit and savings services were offered in the networks and each borrower can have five savers. In recent years, credit becomes more and more important, it is only one in different ways to help poor people to improve life conditions and have a better life.But with the conventional financial services, borrowing money is difficult with the poor people. Matin et al. (2002) http://onlinelibrary.wiley.com/doi/10.1002/jid.874/pdf state that when a bank allows poor people to borrow money, the bank has to take risk and high level of insecurity. Causes of these risks include unstable salary and consumption do not coincide, broader environmental factors and household-specific factors.They also argued about two characteristics:
The interaction between poor people and formal sector institution are limited
Savings, credit and insurancecannot be used as ‘separate’ services because the poor use saving and credit as substitutes for insurance
In a research, Wright and Mutesasira (2001) http://www.microfinancegateway.org/gm/document-1.9.28889/26216_file_the_relative_risks_.pdf state that savings services have a main role in business management and household affairs. There are many poor people will be helped if microfinance institutions take risk and provide useful savings and credit services. They also give an example about Elgon Village Bank to support this issue. This bank provided useful services for over 1,700 clients that had $312,875 total in deposit and 313,750 in withdrawn. Most of the customers were using their accounts for managing their market business and had small amount of money in the accounts (£5 on average per account). The institutions had to take risks with the deposit but these services helped the poor to manage their properties in a better way.
In the other hand, microfinance system also helps fight against the poverty, especially in the developing countries. The World Bank estimates that there are more than one third of the population around the world lives with less than $2 per day. With this low level of income, there are no conventional bank will allow