Original document was submitted as an honors thesis requirement. Copyright is held by the author.

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Much of prior literature on the relationship between microfinance and the macro-economy has focused on the effect of the latter in determining the success of microfinance institutions (MFIs). However, the microfinance industry has been underserved in studies evaluating microfinance as a legitimate contributor toward macro-economic growth. Researching this connection would provide a clearer direction for policymakers to support microfinance, and the institutions that foster such activities. This paper investigates the hypothesis that microfinance is not only important to the people at the bottom of the socio-economic pyramid, but for the overall health of a national economy. We explore different mechanisms as to how microfinance could affect the macro-economy, and simultaneously enable the growth of micro, small and medium enterprises (MSMEs), and evaluate the possibility of such scenarios.