Banker to The PoorBy: Muhammad Yunus

Group I

Agenda

• Overview– Author– Book

• Ethical Issues• Critique• Personal Perspective• Recommendation

Author

• An economist from Bangladesh• Chairman of the economics department at

Chittagong University• Inventor of Micro-credits• Founder of Grameen Bank• Noble Peace Prize Winner• Aspires to create social business

Book Overview

• An autobiography about his life and how he formed the Grameen Bank– What influenced him?– His concept of micro lending– Importance of working women– Growth and challenges for the bank– And what it has achieved till date

Continued…

• Most essential decade was 1970s• Bangladesh won its independence

– But left the country in Famine• Millions of people needed to be rehabilitated• Yunus was stricken by the amount of poverty

– He desperately wanted to change it.– He initiated projects to aid the farmers

Differentiating Poorest from the Poor

• Farmers were not the poorest• Poorest of the poor had

– No land– Food– Clothes– Source of income

• Mostly women with kids• If not helped, they would die

A New Form of Bank

• Sufiya Begum– The inspiration for Grameen Bank

• Loan sharks– Ate up the profit in terms of huge interest

• Birth of Grameen Bank– Grant small loans at decent interest rate– Without any collateral– Mostly for women– Based on trust and good faith

Grameen Bank Success

• In 1976– Only a small single hut– Students work as volunteers– Number of borrowers = 42 women

• According to the book, it has now– 1,181 branches– 11,777 employees– Total Loans given $174.78 billion– 98% repaid– 95% borrowers are women

• Over 250 institutions around the world operate micro-credit programs based on Grameen

Ethical Issues

• Inequality– Women treated unfairly

• Regular Banks not allowing poor people to borrow– No collateral– Illiterate

• Moral rights vs. religious rights (women)– i.e. women are not allowed to work outside

Ethical Issues Contd.

• Multilateral Aid Institutions– Aiding countries with the biggest price tag– Move up the promotion ladder

• Corrupted officials– Government, suppliers, consultants

• Corporate Social Responsibility– All businesses want money– No one wants the betterment of society

Critique

• Book Quality– mostly focuses on micro-credit and the Grameen

Bank– well-written– a subtle arrogance exists– quality is derived from the content

Critique Contd.

• His points:– Well argued and effective– Uses individual examples– Uses statistics to better grasp the context

• Contribution to the field– It “is” the field to micro lending– Relations with World leaders ensure field

development

Critique Contd.

• Raises the question of whether micro-lending is applicable in first world countries.

• In a sense his goal is the opposite of “trickle down theory”

• Gives “short shrift” to issues such as GDP and overpopulation

Personal Prospective

• Establishment of the Bank• Utilitarianism• Competition• Ownership of the Bank

Establishment of the Bank

The government bears responsibility for its failure to keep the market fair.

Government

Utilitarianism

• An action is right if it tends to produce, the greatest amount of good for the greatest number of people.

Competition

• Competition tends to produce efficiency in the market and benefits the general consumer by resulting in a variety of goods at the best prices.

Ownership

• Government control would not be good for bank’s development

Possible Improvements

• Explaining how his theory negates traditional economic theory

• Is micro lending “one size fits all”?• More technical and less optimistic approach• Include organizational structure and balance

sheets• Is it possible for normal banks to micro lend?

– If so? How?

Thank YouQuestion or Comments

References

• Picture of Mr. Yunus (slide 3)– http://www.speakers.com/media/2012/images/yunus-muhammad-bio09.jpg

• Title Page– http://thelemonaideguide.com/lemonaideblog/wp-content/uploads/2010/05/capitol-

vs-finance.jpg

• Book pic– http://covers.openlibrary.org/w/id/1468840-L.jpg