A Bank for the Poor or a Poor Bank: Muhammad Yunus

1. A Bank for the Poor or a Poor Bank: Muhammad Yunus The man PhD in Economics Taught in US then in home country Bangladesh Be of help after civil war The story Famine Poor people working 24/7 for “slave” wages No way to get out of the “hole” Access to credit under the strictest conditions Market?

2. A Bank for the Poor or a Poor Bank: Muhammad Yunus The idea Get people out of poverty Give them access to (micro)credit – Grameen Bank (1976; 1983) Follow a set of rules (“16 decisions”) The “16 decisions” Discipline, unity, courage, and hard work Look after the family and take care of the living place Grow and eat vegetables (?) Children’s education and health Collectivization of investments, responsibilities, and other activities Monitoring (peer pressure)

3. A Bank for the Poor or a Poor Bank: Muhammad Yunus Microcredit is the lending of tiny amounts of money to small entrepreneurs who probably couldn’t borrow otherwise Some data (T. Bethell): 2,300 branches, and 21,000 staff $1 billion a year is lent to 7 million borrowers 97 percent of whom are women Average loan: $130 Borrowers are also owners of the bank (67% of deposits) No collateral requirement Claims a repayment rate of 99 percent (?)

4. A Bank for the Poor or a Poor Bank: Muhammad Yunus Some controversial issues: Appealing to policymakers Profitable? Nobel prize? Interest? Salesmanship: credit as human right, women, end of poverty No interest and payment schedule – It’s a local grant Peer pressure rather than legal liability Group responsibility leads to moral hazard Self-employed or wage earner? Debt or savings?

5. A Bank for the Poor or a Poor Bank: Muhammad Yunus Other controversies: Grameen as a conduit for international aid dollars Subsidized on a continuing basis Indoctrination of borrowers (16 decisions) Social engineering Feminist movement / progressives of the World Grameen Trust, Grameen Foundation, Grameen Capital Management, Grameen Phone, Grameen Telecom, Grameen II Does the Foundation fund the Bank? Is the bank profitable? Self-sustainable?

6. A Bank for the Poor or a Poor Bank: Muhammad Yunus The source of growth/development? “To have money is the result of economic achievement, not its precondition” “It is easy to give; it is harder to make giving unnecessary” A radical response: The Austrian perspective (J. Tucker) Financially dangerous Subtly coercive “Enemy to children and families” Credit is no right, property alone is If Grameen can give loans to poor women without assets, why can't Citicorp?

7. A Bank for the Poor or a Poor Bank: Muhammad Yunus A radical response: The Austrian perspective (J. Tucker) Greed, cultural barriers, bad training, or racism If Grameen is really profitable, Western bankers wouldn't need to be cajoled into copying it A conduit for huge grants from governments and agencies Grameen then deposits that money in fixed-term and short-term accounts in commercial banks that pay higher rates (arbitrage?) Credit Ponzi-like pyramiding scheme “Feminist social engineering” The bank claims the system is "self policing” but… Weekly physical-training exercises, parades, chants (?) “More of a cult than a financial institution”

8. A Bank for the Poor or a Poor Bank: Muhammad Yunus A radical response: The Austrian perspective (Tucker) Your private life is gone, peer pressure and spying The goal of "zero-population growth” US microcredit experience went all wrong Coercion Collectivist ideology Old-fashion profit-making banks? Concluding thoughts