Financing pro-poor entrepreneur-based innovation: A review of existing literature

Lina Sonne


That innovation and entrepreneurship are important for poverty alleviation and development is well established. However, despite a general agreement that finance affects growth and development by supporting innovative activities in the economy, little has been written specifically on how pro-poor entrepreneur-based innovation in rural areas should be financed. This review explores the literature relevant to understanding financing of pro-poor innovation and entrepreneurship, and shows that financial theories are moving from linear supply-led subsidised credit approaches towards new, more systemic perspectives. These include theories on financial systems theories, microfinance, and financial access and inclusion. This review notes that a theoretical and policy gap exists as regards financing of pro-poor entrepreneur-based innovation in rural areas.

Keywords: Pro-poor finance, finance innovation, finance entrepreneurship, financial innovation, rural finance

JEL Codes: O16, O18, O31, R51

UNU-MERIT Working Papers ISSN 1871-9872

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