The Grameen Bank and Poverty alleviation in Bangladesh

TLDR: The Grameen Bank of Bangladesh as discussed by the authors is an example of a bank that provides credit to the poorest of the poor on a group liability basis instead of any collateral, based on this principle, over the last decade, it has been successfully operating with an unprecedented loan recovery rate.

Abstract: . The Grameen (grameen means rural) Bank of Bangladesh has innovated a mechanism under which credit can be provided to the poorest of the poor on a group liability basis instead of any collateral. Based on this principle, over the last decade, the bank has been successfully operating with an unprecedented loan recovery rate. Although from the point of view of profits, the Grameen Bank is not yet a viable institution, empirical evidence suggests that the bank's credit program has significantly improved the socioeconomic conditions of its borrowers. The Grameen Bank's success story in the alleviation of poverty in Bangladesh has resulted in widespread attempts of its replication in many other countries including the United States and Canada. The spread of the Grameen Bank idea around the world has drawn keen attention from researchers, policy makers and agencies interested in rural development.