- Gül Unal
The impetus for “microcredit”—the extension of very small business loans to impoverished borrowers who often lack collateral, steady employment, or a credit history—was mainstream finance’s unwillingness to deal with the poor, which, in turn, was widely believed to perpetuate the cycle of poverty. When Bangladesh was hit by famine in 1974, Mohammad Yunus, an economics professor, popularized the concept with the launch of his now-famous Grameen Bank. For his efforts, Yunus was awarded the Nobel Peace Prize in 2006. But just how successful has microcredit been in breaking the poverty trap in developing countries?