There would be no need for microfinance if banks catered to individual clients whatever the amounts and in the absence of security: land, machines or buildings. In a market with full transparency and perfect information among all contracting parties, it would not make a difference that clients are not easily identifiable or that they lacked a tax and social security number. In a perfect market, there would also be no need for loan appraisals and other bank-internal reviews. With full transparency, financial contracts could be concluded at zero transaction costs: the price paid for a loan by a borrower (i.e. the interest rate i) would be identical to r, the yield obtained by the lender (Figure 2.1).