As a result, fluctuations in exchange rates tend to produce counter-cyclical valuation effects on net external assets. When the exchange rate appreciates, foreign currency assets shrink in domestic currency terms and as a share of GDP.
There is some truth to the popular image of the successful firm which had its beginnings in someone's garage. Microenterprises can grow into small businesses, and small businesses can grow into large firms. Thus, microfinance plays the role of business incubator by compensating for the difficulties faced by very small firms and startups in obtaining credit from established financial intermediaries.