NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, April 22, 2014

The Grameen Bank was founded as a private bank in Bangladesh in 1983, with the authorization of the Bangladesh national government. Mohammad Yunus, its founder, eventually won a Nobel Peace Prize in 2006 for the profoundly positive disruptive effect of the micro-credit work that bank was doing in Bangladesh. Conceptually, what the Grameen Bank did for the poor in Bangladesh, particularly the 96 percent of its debtors who are women, was unprecedented. Micro-credit fundamentally empowers the poor, who would otherwise lack access to financing. Contrary to conventional loans, micro-credit loans are more tolerant of counterparty risk and employ a group-based approach to ensure loan repayment and financial discipline.