Stanford Social Innovation Review : Informing and inspiring leaders of social change



Microfinance Needs Regulation

The volatile combination of profit-seeking microfinance companies, minimal competition, and vulnerable borrowers has opened up dangerous potential for exploiting the poor. The microcredit industry needs to be regulated—through policies that address transparency, high interest rates, and abusive loan recovery practices.


Since Muhammad Yunus pioneered the concept of microcredit in 1976 and founded the Grameen Bank in Bangladesh, microcredit has become a major movement. Worldwide, 3,552 microcredit institutions provided loans to 155 million clients, finds the State of the Microcredit Summit Campaign Report 2009. Grameen Bank alone disbursed more than $5 billion in microloans over the last 10 years, and it now has 7.7 million borrowers. According to the Grameen Bank website, microcredit is “offered for creating...

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