Yunus micro loans nobel peace prize

 

yunus micro loans nobel peace prize

Microcredit is part of microfinance , which provides a wider range of financial services, especially savings accounts, to the poor. Modern microcredit is generally considered to have originated with the Grameen Bank founded in Bangladesh in 1983. [4] Many traditional banks subsequently introduced microcredit despite initial misgivings. The United Nations declared 2005 the International Year of Microcredit . As of 2012, microcredit is widely used in developing countries and is presented as having "enormous potential as a tool for poverty alleviation." [5]

Critics argue, however, that microcredit has not had a positive impact on gender relationships, does not alleviate poverty, has led many borrowers into a debt trap and constitutes a "privatization of welfare". [6] The first randomized evaluation of microcredit, conducted by Esther Duflo and others, showed mixed results: there was no effect on household expenditure, gender equity, education or health, but the number of new businesses increased by one third compared to a control group. [7]

Microcredit organizations were initially created as alternatives to the "loan-sharks" known to take advantage of clients. [4] Indeed, many microlenders began as non-profit organizations and operated with government funds or private subsidies. By the 1980s, however the "financial systems approach," influenced by neoliberalism and propagated by the Harvard Institute for International Development , became the dominant ideology among microcredit organizations. The commercialization of microcredit officially began in 1984 with the formation of Unit Desa (BRI-UD) within the Bank Rakyat Indonesia . Unit Desa offered ‘kupedes’ microloans based on market interest rates.

Yunus micro loans nobel peace prize

We connect women and men in poor communities to a vital mix of financial, health, and agricultural services and information. Our innovations include, yet go well beyond, new technologies. Working with our partners, we generate inclusive ways of sharing knowledge and doing business across four main program areas, highlighted below.  

You can also learn about the programs of Freedom from Hunger here . As we strategically integrate our programs, FFH will operate as a supporting organization of Grameen Foundation.

Two billion people lack access to formal financial services, and the majority of the unbanked are women. Women are also considerably less likely than men to own a mobile phone or access digital financial services. We work with women, poor communities and organizations to develop financial solutions that help people invest in small businesses, build savings, manage risk and plan ahead.

Microcredit is part of microfinance , which provides a wider range of financial services, especially savings accounts, to the poor. Modern microcredit is generally considered to have originated with the Grameen Bank founded in Bangladesh in 1983. [4] Many traditional banks subsequently introduced microcredit despite initial misgivings. The United Nations declared 2005 the International Year of Microcredit . As of 2012, microcredit is widely used in developing countries and is presented as having "enormous potential as a tool for poverty alleviation." [5]

Critics argue, however, that microcredit has not had a positive impact on gender relationships, does not alleviate poverty, has led many borrowers into a debt trap and constitutes a "privatization of welfare". [6] The first randomized evaluation of microcredit, conducted by Esther Duflo and others, showed mixed results: there was no effect on household expenditure, gender equity, education or health, but the number of new businesses increased by one third compared to a control group. [7]

Microcredit organizations were initially created as alternatives to the "loan-sharks" known to take advantage of clients. [4] Indeed, many microlenders began as non-profit organizations and operated with government funds or private subsidies. By the 1980s, however the "financial systems approach," influenced by neoliberalism and propagated by the Harvard Institute for International Development , became the dominant ideology among microcredit organizations. The commercialization of microcredit officially began in 1984 with the formation of Unit Desa (BRI-UD) within the Bank Rakyat Indonesia . Unit Desa offered ‘kupedes’ microloans based on market interest rates.

The Grameen Bank ( Bengali : গ্রামীণ বাংক ) is a Nobel Peace Prize-winning microfinance organization and community development bank founded in Bangladesh . It makes small loans (known as microcredit or "grameencredit") [5] to the impoverished without requiring collateral . The name Grameen is derived from the word gram which means "rural" or "village" in the Bengali Language . [6]

Grameen Bank originated in 1976, in the work of Professor Muhammad Yunus at University of Chittagong , who launched a research project to study how to design a credit delivery system to provide banking services to the rural poor. Based on his results, in October 1983 the Grameen Bank was authorized by national legislation as an independent bank. In 2006, the bank and its founder, Muhammad Yunus, were jointly awarded the Nobel Peace Prize . [7] In 1998 the Bank's "Low-cost Housing Program" won a World Habitat Award . In 2011, the Bangladesh Government forced Yunus to resign from Grameen Bank, saying that at age 72, he was years beyond the legal limit for the position. [8]

Muhammad Yunus earned a doctorate in economics from Vanderbilt University in the United States. He was inspired during the Bangladesh famine of 1974 to make a small loan of US$27 to a group of 42 families as start-up money so that they could make items for sale, without the burdens of high interest under predatory lending . [9] Yunus believed that making such loans available to a larger population could stimulate businesses and reduce the widespread rural poverty in Bangladesh.

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In 2005 the United Nations declared the year the International Year of Microcredit. At a time when the clamour for financial inclusion was gaining momentum, the declaration brought microfinance from the periphery of finance and offered an estimated 2.5 billion people an opportunity to “grow thriving businesses and, in turn, provide for their families, leading to strong and flourishing local economies.”

At that time it was widely believed that reducing extreme poverty would be nearly impossible if the majority of the poor could not save or have access to credit. Small lenders were hardly entering into the mainstream financial sector. Their loans were restricted to under $200 at high interest. The rigidity of commercial banks meant that microfinance institutions (MFIs) offered the only hope for financial inclusion to the world’s poor. Then UN Secretary-General Kofi Annan acknowledged as much when he declared that microfinance could be a “weapon against poverty and hunger.”

A decade later the world has an opportunity to evaluate whether microcredit really “changes peoples’ lives for the better,” as Mr. Annan asserted. In July of this year, the UN will hold the Third International Conference on Financing for Development, in Addis Ababa, Ethiopia. While the conference will discuss the whole spectrum of effective and efficient mechanisms of mobilizing resources for development, microfinance is likely to be one of the key topics.