|
|
In the late 20th century and early 21st century, there has been a growing movement called microfinancing. This movement became popular thanks to Bangladeshi banker and economist Muhammad Yunus, who was jointly awarded the Nobel Peace Prize in 2006 with Grameen Bank. Microfinancing emphasizes microcredit, or the creation of small loans given typically to poor entrepreneurs in developing nations who are too impoverished to apply for more traditional bank loans. Supporters of the microfinance movement argue that microfinance is cyclical in nature; by giving loans to poor individuals, these people can create businesses and sustain their households by raising income and building assets.1
Critics of the movement emphasize the potential for usury, the difficulty in tracking how money lent is spent, and the sustainability of operations. In addition, some microfinance institutions charge obscenely high interest rates which could instead stunt poor individuals’ economic growth. This leads critics to believe that microcredit is a short-term solution to a long-term problem. Nevertheless, this growing trend is making headlines, and serves as a nontraditional way for individuals to participate in international investment.2
2 Thomas Dichter “Hype and Hope: The Worrisome State of the Microcredit Movement.”