Microcredit

Microcredit refers to the giving of small loans to people who lack collateral. Small scale, non-traditional banks, most notably the Grameen Bank, distribute these loans to small groups of impoverished people with the intention that the loans spur on economic activity in the community, creating more jobs and bringing more people out of poverty.

The loan receiving groups are generally comprised of unemployed women who demonstrate an entrepreneurial drive. Women are the receivers because, in general, loans to women will benefit the entire family whereas loans to men tend to lead to more personal consumption. Giving loans to women has also tended to have the positive externality of redefining class and gender standards that are typically held in the communities in which microcredit is established.

Historical Precedent

Models

Success Stories

Critiques of Microcredit