Banker to the Poor

Yunus describes how he moved from teaching economics at Chittagong University to lending twenty-seven dollars of his own money to forty-two villagers in Jobra, and from there to founding Grameen Bank. The account covers the design decisions that made the model work and the institutional resistance he met from commercial banks, from the Bangladeshi central bank and from development agencies.

The design elements are specific and are the reason the book matters. Grameen lends to groups of five, where the group is not a joint guarantor but a peer support and screening mechanism, with disbursement sequenced so that later members' access depends on earlier repayment. It lends predominantly to women, on the empirical finding that repayment rates were higher and that household spending shifted toward children. It collects in small weekly instalments beginning almost immediately, requires no collateral and no legal contract, and takes the bank to the village rather than the borrower to the branch. Yunus reports repayment rates above ninety-five percent and argues that the poor are creditworthy and that the absence of credit access, not lack of skill or work, is the binding constraint.

The book is a founder's account and it is advocacy. The microfinance evidence has moved substantially since 1998: randomised evaluations have found that microcredit expands business activity modestly but does not reliably raise income, consumption or poverty exit at the levels the movement claimed, and the commercialisation of microfinance produced over-indebtedness crises in Andhra Pradesh and elsewhere. Yunus himself opposed that commercialisation. Read it for the institutional design and the founding argument, not as evidence of impact.