Grameen Microfinance: An Evaluation of the Successes and Limitations of the Grameen Bank

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Asian Studies
Growth and Development
Income Distribution
Inequality and Stratification
International Economics
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Political Economy
Regional Economics
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The Grameen Bank has attracted worldwide attention by providing small loans to poor people across rural villages in Bangladesh. In 2006 the Nobel Committee awarded the Grameen Bank and its founder Professor Mohammad Yunus the Nobel Peace Prize for their, “efforts to create economic and social development from below.”[1] The Nobel committee asserted that microfinance is “an important liberating force and an ever more important instrument in the struggle against poverty.”[2] Since then, a global microfinance revolution has emerged and the Grameen Bank has been at the vanguard of this movement, showing the potential to alleviate poverty by providing credit to poor households so that they can generate new self-employment opportunities. Today, while diverse approaches to microcredit exist many view the Grameen Bank’s microfinance model as a paradigmatic alternative to top–down government-sponsored and NGO development initiatives.[3] Despite the contemporary salience and the future promise of Grameen-like microfinance as a poverty-alleviating tool, however, criticisms and conflicting evidence have emerged against the Grameen Bank’s microfinance model and its operations. As more microfinance institutions replicate this model, billions of dollars continue to be invested and millions of borrowers become dependent on Grameen-like microfinance, therefore, it has become increasingly important to examine the successes and limitations of the Grameen Bank. The goal of this paper will be to evaluate the Grameen Bank’s financial and social successes and limitations. Chapter 1 explores the origins of the Grameen Bank and the structure of its credit delivery system. Chapter 2 examines the Grameen Bank’s financial successes, including its institutional, outreach and loan portfolio growth in recent years. Chapter 3 presents the financial limitations of the Grameen Bank, in particular the recent rise in delinquency, several possible explanations for this rise as well as its significance relative to its main competitors and other microfinance institutions around the world. Chapter 4 presents the Grameen Bank’s social successes and limitations and finally Chapter 5 evaluates whether the Grameen Bank has been financially and socially successful as an institution and as a leader in the global microfinance movement. [1] "The Nobel Peace Prize 2006". 23 Jul 2010 [2] "Prof. Muhammad Yunus & Grameen Bank Awarded The Nobel Peace Prize for 2006." Grameen Bank. Web. 15 July 2010. . [3] Selinger, Evan. Does Microcredit ‘‘Empower’’? Reflections on the Grameen Bank Debate. Rep. Springer Science+Business Media, 23 Jan. 2008. Web. .

Devesh Kapur
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