Executive Summary

In the early 1970s, Professor Muhammad Yunus envisioned a means of alleviating

poverty by circumventing the major impediment to lending to the poorest in society
the need for collateral. He tested this instinct in an experiment in 1976, when he
lent about $27 to 42 women in an ordinary Bangladeshi village. Just 30 years later,
Grameen Bank has more than 3.2 million borrowers (95 percent of whom are
women), 1,178 branches, services in 41,000 villages and assets of more than $3
billion. This paper explores Grameen Banks origins, structure, culture, performance
and efforts to expand and broaden the microfinance agenda. The authors evaluate
Grameens success in implementing Yunuss vision in the light of various challenges
and conclude that the short-run effects of microcredit have been positive and that
microfinance will continue to make important contributions to poverty reduction.
Admittedly, an assessment of Grameen solely in terms of financial viabilitythat is,
without also taking into account the social benefits in terms of the empowerment of
women and its positive impact on human capitalmust question whether such an
institution will ever generate sufficient returns to profit-driven shareholders to
attract the sort of capital required to enable it to reach all segments of the poor. The
legacy of Grameen Bank will ultimately be not what it has done for shareholders,
but how it has impacted society.