microcredit

The extension of very small loans to entrepreneurs who lack collateral, steady employment and credit history, and are therefore not considered good credit risks by traditional banks. Microcredit has existed in a number of forms for hundreds of years, but has gained notoriety in the face of defaults on massive international development loans and the rise of Muhammad Yunus’ Grameen Bank (and others). Rather than filter money through bloated and corrupt bureaucracies, microcredit seeks to deliver investment money directly to those at the very bottom of the economic ladder, and has had remarkable successes, especially among women in undeveloped countries. See also Grameen Bank.

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