Who came up with microcredit. History, idea, successes and problems

Many believe that poverty is a vicious circle that cannot be escaped. Indeed, to start a business, you need the money, often you just have to get them anywhere. Banks give loans to only a certain range of people – those who are most likely to be able to repay them. So it turns out that money only makes money. Fortunately, relatively recently, microfinance companies have begun to emerge that can be borrowed by virtually anyone.

Microcredits have become a chance to break from a sinister impasse. But any medication if used mindlessly can become a poison. And here, without effort and calculation, success will not be achieved. And if you can easily borrow on a regular basis for spontaneous purchases and services, you can get to the debt pit.

What is microcredit?



Microcredit is a small-term loan that can be obtained through a short-term simplified scheme. As a rule, in Ukraine the maximum amount of microcredit is from 3 000 to 10 000 USD.

for a period of 10 days to a month. The terms and conditions of each microfinance company may vary greatly. But the bottom line is that micro-credits are issued within minutes, and this requires a minimum package of documents.

The idea belongs to Professor Mohammed Yunus. He is originally from a very poor country – Bangladesh. The professor received an economics degree in the United States. He was always concerned about hunger and poverty in his country. Therefore, returning home, since 1974, he has become actively involved in the development of Bangladesh’s economic system.

Who came up with microcredit and why?

Who came up with microcredit and why?

Yunus noted that if you borrow even a small amount, it can play an important role in life and significantly improve the financial situation of poor people. For the experiment, Yunus gave $ 27 as micro-credit to ten women who made bamboo furniture. But that was enough for them to buy the material. The furniture was manufactured and sold quickly and there were no problems with the refund. Profits were received by both parties. Yunus decided to continue his experiment. He issued loans on the condition that the money will be spent on expanding and opening a business.

Local moneylenders considered Yunus crazy and did not believe in the success of his concept. But to our surprise, no less than 3% of the money was lent back. This figure was insignificant compared to regular loans. Soon the professor created his own Grameen Bank, which became famous worldwide. In translation, this means Village Bank. Everything here is based solely on trust, without any written agreement. There is no higher return rate with any bank in the world.

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