Microfinance Crisis

Micro-finance,an idea proposed by Muhmmad Yunus, a Noble Prize-winning Bangladeshi economist, is to act as a social business solution in developing countries.  However, when decisions about how the poor should receive financial support plunged the microfinance industry into a crisis.  The concerns revolved around the question whether there was a need for a reliance from modern financial institution’s assistance (raise the funding in capital markets) , or support from non-profit sources. C.K. Prahalad, an Indian management guru, suggested that the poor should start up their own business to yield healthy profits, which then can also satisfy shareholders while promoting social development. In great surprise, Bangladesh’s Grameen Bank, which depends largely on donor grants and sustainable repayments, have not been affected from any of these problems.  As a result to the crisis, it has lead to Dr. Yunus’ ouster. It is to one’s wonder whether microfinance is a social sustainable solution since it also brings about to many political conflicts.

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