With microfinance, the mechanism of ________ is a way to avoid the problem of imperfect information.

A) requiring no collateral
B) peer lending
C) making only small loans
D) accepting savings deposits

Microfinance

Financial services provided to individuals or small businesses in underserved markets or developing countries, often including small loans.

Imperfect Information

The absence of full knowledge concerning product characteristics, available prices, and so on.

Peer Lending

A financial transaction in which individuals lend money to each other directly, often facilitated by an online platform, bypassing traditional financial intermediaries.