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Microcredit
Microcredit
Microcredit
Microcredit
Microcredit
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Microcredit

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Published in: Economy & Finance, Business
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  • 1. Very small loans (<$100) to poor people
  • 2. Loans to those who lack:— Collateral— Steady employment— Credit history— Therefore, can’t get traditional credit.— Village money lenders have been only source of credit.— Objective to develop self-employment projects.
  • 3. Grameen Bank— Founded by Muhammad Yunus in 1976 in Bangladesh. Won Noble Prize in 2006.— In 1974 loaned his own money to 42 people including a woman who made bamboo furniture.— 96% of loans to women.— Loans to “solidarity groups” helps ensure repayment.
  • 4. Microfinance Now— Thousands of institutions.— Serving millions of poor people.— Loan is preferable to aid.— Banks now offering micro loans.— Poor entrepreneurs possess skills just don’t have the capital.— Typical interest rate 11-12%.
  • 5. Criticism— Microcredit provides govt’s rationale for reducing their anti-poverty, education & health programs.— Success primarily judged from lender’s view (high repayment rates & financial viability).— Borrowers’ become dependent on for normal hh purchases rather than investment.— Men spend the money while women stuck with the debt.

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