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on March 18, 2014
Dr. Yunus was a brilliant student. One of the top 100 or top 200 in the entire country during his high school national exams. When he came to the USA to study Economics he was warned of a couple of really difficult professors in what were supposed to be killer courses in grad school. Turns out he found those killer courses easy and enjoyable. Then he goes on to win the Nobel Prize.

There are memorable tidbits in this book about his personal life that were touching and heart warming - his falling in love with the white girl and marrying her, his struggles with his mother's mental illness, his not being able to study unless the TV was on, his political activism, his sincere efforts to alleviate penury using practical methods rather than overly-theoretical economic models. The only problem with his micro-credit scheme was that he charged usury for it and he had an interesting way of claiming that it wasn't usury because the indigent borrowers became "shareholders" by virtue of their loans. But for all pragmatic purposes it was just lipstick on the pig.
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on August 4, 2012
This book tells the story of Muhammad Yunus' efforts in his fight against poverty through Micro-Lending: "My repeated trips to the villages around the Chittagong University campus led me to discoveries that were essential to establishing the Grameen Bank. The poor taught me an entirely new economics. I learned about the problems that they face from their own perspective. I tried a great number of things. Some worked. Others did not. One that worked well was to offer people tiny loans for self-employment. These loans provided a starting point for cottage industries and other income-generating activities that used the skills the borrowers already had. I never imagined that my micro-lending program would be the basis for a nationwide "bank for the poor" serving 2.5 million people or that it would be adapted in more than one hundred countries spanning five continents. I was only trying to relieve my guilt and satisfy my desire to be useful to a few starving human beings. But it did not stop with a few people. Those who borrowed and survived would not let it. And after a while, neither would I."

What truly sets this book and its underlying story apart, is the fact that it defines a new paradigm in social economics. It redefines what poverty is, its true causes and proposes a practical and pragmatic to help eradicate it. Muhammad is as successful with his initiative, as he is with sharing the underlying stories first-hand and on the ground to make his readers truly understand the problem he is tackling - that of poverty and its vicious cycle. The main premise of the book is that credit - which is traditionally not available through commercial banks for this sector - is what is needed to break out of the poverty cycle. The author did not only identify the problem but built a foundation to offer micro-lending (Grameen Bank). This has served as a model to be replicated all over the world, and has created a true global movement.

A very enlightening book about an aspect of economics that is often forgotten and left behind. A must read!

Below are excerpts from the book that I found particularly insightful:

1- "Analyses of the causes of poverty focus largely on why some countries are poor rather than on why certain segments of the population live below the poverty line. Socially conscious economists stress the absence of "entitlements" of the poor. What I did not know yet about hunger, but would find out over the next twenty-two years, was that brilliant theorists of economics do not find it worthwhile to spend time discussing issues of poverty and hunger. They believe that these will be resolved when general economic prosperity increases. These economists spend all their talents detailing the processes of development and prosperity, but rarely reflect on the origin and development of poverty and hunger. As a result, poverty continues."

2- "Like navigation markings in unknown waters, definitions of poverty need to be distinctive and unambiguous. A definition that is not precise is as bad as no definition at all."

3- "They were poor because the financial institutions in the country did not help them widen their economic base. No formal financial structure was available to cater to the credit needs of the poor. This credit market, by default of the formal institutions, had been taken over by the local moneylenders. It was an efficient vehicle; it created a heavy rush of one-way traffic on the road to poverty."

4- "Indeed, more than 98 percent of our loans are repaid. The poor know that this credit is their only opportunity to break out of poverty. They do not have any cushion to fall back on. If they fall afoul of this one loan, they will have lost their one and only chance to get out of the rut."

5- "Today, at every Grameen branch, our members take enormous pride in reciting the Sixteen Decisions. They are as follows: 1) We shall follow and advance the four principles of the Grameen Bank - discipline, unity, courage, and hard work - in all walks of our lives. 2) Prosperity we shall bring to our families. 3) We shall not live in a dilapidated house. We shall repair our houses and work toward constructing new houses at the earliest opportunity. 4) We shall grown vegetables all the year. We shall eat plenty of them and sell the surplus. 5) During the plantation seasons, we shall plant as may seedlings as possible. 6) We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health. 7) WE shall educate our children and ensure they they can earn to pay for their education. 8) We shall always keep our children and the environment clean. 9) We shall build and use pit latrines. 10) We shall drink water from tube wells. If they are not available, we shall boil water or use alum to purify it. 11) We shall not take any dowry to our sons' weddings; neither shall we give any dowry at our daughter's wedding. We shall keep the center free from the curse of dowry. We shall not practice child marriage. 12) We shall not commit any injustice, and we will oppose anyone who tries to do so. 13) We shall collectively undertake larger investments for higher incomes. 14) We shall always be ready to help each other. If anyone is in difficulty, we shall all help him or her. 15) If we come to know of any breach of discipline in any center, we shall all go there and help restore discipline. 16) We shall introduce physical exercises in all our centers. We shall take part in all social activities collectively."

6- "Experts on poverty alleviation insist that training is absolutely vital for the poor to move up the economic ladder. But if you go our into the real world, you cannot miss seeing that the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labor. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty. Profit is unashamedly biased toward capital. In their powerless state, the poor work for the benefit of someone who controls the productive assets. Why can they not control any capital? Because they do not inherit any capital or credit and nobody gives them access to it because they are not considered creditworthy."

7- "In a world that trumpets the superiority of the market economy and free enterprise. aid money still goes to expand government spending often acting against the interests of the market economy...If aid is to have some impact on the lives of the destitute, it must be rerouted so that it reaches poor households more directly."

8- "Worst of all, economists have failed to understand the social power of credit...In reality, credit creates economic power, which quickly translates into social power...If economists would only recognize the powerful socioeconomic implications of credit as a human right."

9- "Micro-credit is not a mircle cure that can eliminate poverty in one fell swoop. But it can end poverty for many and reduce its severity for others. Combined with other innovative programs that unleash people's potential, micro-credit is an essential tool in our search for a poverty-free world."

10- "I am proposing two changes to this basic feature of capitalism. The first change relates to this overblown image of a capitalist entrepreneur. To me, an entrepreneur is not an especially gifted person. I rather take the reverse view. I believe that all human beings are potential entrepreneurs. Some of us get the opportunity to express this talent, but many of us never get the chance because we were made to imagine that an entrepreneur is someone enormously gifted and different from ourselves...The second change relates to how an entrepreneur makes investment decisions. Economic theory depicts the entrepreneur as a profit maximizer...As a result, the social dimension in the thinking of the entrepreneur has been completely bypassed...I propose that we replace the narrow profit-maximization principle with a generalized principle - and entrepreneur maximizes a bundle consisting of two components: ((a) profit and (b) social returns, subject to the condition that profit cannot be negative."

11- "We believe that poverty does not belong in a civilized human society. It belongs in museums. Thus summit is about creating a process, which will send poverty to the museum."
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on October 3, 2009
I do not know what Hillary Clinton and Jimmy Carter's endorsements are doing on this book. Muhammad Yunus is the next best thing to Milton Friedman. He's a lot wordier than Uncle Milton, though.

Muhammad Yunus is responsible for a revolutionary approach to poverty eradification: skip the world bank, bypass the UN, abolish the welfare state, and loan the money directly to poor people. Unsecured. No collateral. People know what they need to survive and thrive. Often it is as little as $125 dollars for a tin roof for their shack, so they can continue weaving or grinding grain for sale during the 5-month rainy season. That $125 may be the only thing keeping a family from desperate, filthy poverty. It may bring about their dignified self-sufficiency. But governments and banking traditions get in the way of poverty alleviation and perpetuate the misery.

Grameen bank has partnered with poor people worldwide to help them pull themselves out of poverty through individual initiative. Tiny bits of money to the best tamale maker so he can buy a cart and sell his tamales through town. Tiny bits of money so women can buy grain to grind for profit. Tiny bits of money that do not pass through the hands of bureaucrats or corrupt governments. Microcredit unleashes human potential.

Beginning at page 185, Yunus explores the reality of the welfare state in developed countries: the disincentives for work; the imprisonment of the poor at the bottom; and the tenacity of welfare programs, blocking innovation. Slowly, he describes people turning away from reliance on government. In real life, the taxes taken from rich people do not help the poor. They help the government employees in the bureaucracies. Helping the poor means those bureaucrats are out of a job. Page 204 is a rallying cry for government to get out of the way of individual enterprise. The private sector, unlike the government, is open to everyone.

Loaded with examples of people who have succeeded with micro loans, this book is a winner. Yunus was raised and trained in a marxist/Communist mentality (pp 203-220), but you can tell he is trying to shrug it off. He hasn't found the words yet for what he believes. He still has a hard time admitting capitalism is a benefit to humanity, but he concedes that free markets are very natural and wholesome, and indeed, the only solution for wiping out poverty.

To the extent that we continue to rely on governments for social programs, we will fail the poor.

Exciting to read!
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on May 28, 2008
There's no question that in most of the world, poor people are left out of the money cycle. Since the really poor don't have anything of value (the thinking goes), how can we trust them with anything? Why loan them money? How on earth would they pay? We'd be foolish to believe they would. Also, what would a person with no means actually do with a loan? They certainly don't need that kind of money.

Mohammad Yunus and his creation, the Grameen (Village) Bank, contradict this traditional banker thinking. This book gives a history of Professor Yunus himself and tells the story of how he came to create and grow the bank that eventually won a Nobel Prize for its microcredit programs aimed at exceptionally poor people, especially women. I found the early chapters, about Yunus' personal life growing up in eastern Pakistan, his time in the US, and his return to a newly formed Bangladesh interesting. They provide an appropriate background for his later work in the village near the university where he taught economics, beginning with the first loan he made himself - $27 to 42 people!

I found it quite an easy read, although it is outside my own field of expertise. I appreciated the pace up to the last couple of chapters, which seemed to come bowling at me with enormous speed (though maybe that's on purpose given the organization's seeming explosive growth in the 1990s and beyond). I would have been interested to also read about how a typical loan actually gets used and repaid - it's difficult for me to imagine what a borrower's balance sheet might look like that she would be able to put the full amount to work immediately and still be able to make a payment in 1 week. How much return would you really see on a goat or whatever in the first week? I just don't know. I also found myself questioning the seeming need for loan after loan after loan - I'm not convinced that this is completely a good thing, but it wasn't dealt with at much length in the book so I don't know how typical that is or what it really indicates. The last chapter, dealing with the future of the bank and Yunus' desire for a parallel economic system based not on profit but on social progress seemed a little weird to me, but I'm not an economist. It seems like more trouble to re-invent the wheel than to put the car we already have on another path.

One thing I found especially compelling is Yunus' development of specific measurable outcomes and goals for his bank's members. The bank's Decisions are interesting in that they seem to have been agreed on by the members themselves, not driven from above. I also appreciated his list of indicators to assess poverty level - although this was somewhat glossed over in the text, these measurable outcomes are applicable to any on-the-ground assessment of functional poverty or non-poverty. If this was the only thing in there, it would still be worthwhile. Read this book. Whether you agree wholeheartedly, scoff openly, or something in between, you'll find it thought provoking.
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It is quite sad that Yunis discovered that extreme poverty in Bangladesh can be helped for as few as twenty seven dollars American and his work within Bangladesh should serve as a beacon of hope to others seeking to fight back against the poverty monster. I enjoyed this read very much but couldn't give it the full five stars because I didn't feel like there where enough personal success stories that illustrated the viability of micro lending to the poor. Instead Yunis explains we lent x amount of money to y person and there able to do z now. Personal testimonials would've made for a powerful statement of the Grameen Bank programs rather than just explaining from Yunis.

A second thought is if these programs have met for so much success how come they haven't been exported in mass throughout the world ? Much of the book focuses on poorer rural areas like Bangladesh, Pakistan, Philippines, even several counties in the state of Arkansas in the United States. Are these programs ineffective in urban areas because of socio-economic factors? I currently live in a city of a 150,000 thousand people that may benefit from programs that Yunis is talking about, but yet there is scant evidence of implementation within inner cities. With economies crashing throughout the world, the impoverished cannot just be assumed to live in rural areas anymore. If we are to take Yunis ideas for battling world poverty seriously, these ideas have to be increasingly applied in inner cities.
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on May 23, 2009
This book is part autobiography, part history of the the Grameen Bank, and part reflection on microcredit lessons learned and plans for the future. The book was originally publised in 1997 and revised in 1999 and 2003.

The early chapters cover the author's childhood in Chittagong, his Fulbright scholarship for a Ph.D. at Vanderbilt and his return to Bangladesh following its war for independence. Bored with government work Yunus quit to run the economics department at Chittagong University, situated in the coutryside where the famine and poverty was impossible to ignore. Following experiments with funding irrigation the author turned his attention to the landless poor who were trapped in a cycle of dependency on local moneylenders. Meeting a bamboo stool maker became a pivotal moment, realizing she needed only 22 cents to escape an exploitative arrangement with a trader, and that forty-two people in the same village could be helped for a total of less than $27.

Thus was born Yunus's dream of a bank to help the poor. After months of struggling with orthodox bureaucracies he started a pilot project with the help of students providing one year loans to groups of five borrowers - many of them women - following indoctrination in responsibility and self-reliance. Interest was set at 20%pa with weekly repayments over the course of a year, repayment rates were over 98%. Over the next few years the Grameen Bank expanded into neighboring villages and districts gaining members and managers, and support of first the Central Bank of Bangladesh, and then international institutions including the Ford Foundation. In the 1980s and 1990s the bank expanded rapidly across the country, loaning to over two million members and diversifying into loans for shelters, fisheries, exports and telecommunications. The author is particularly proud that the Bank is now fully independent, owned by its members, and profitable despite the frequent natural catastrophes that afflict Bangladesh. The bank has become a poster child for social entrepreneurship, bypassing government and seeking to eliminate poverty in Bangladesh through its self help principles while making a modest profit. As such it offers a new vision of capitalism, subject to the dicipline of assigning resources efficiently, but without seeking to maximize profits at the expense of everything else.

Positive publicity has helped spread micro-credit to Malaysia and the Phillipines and elsewhere around the world: the Grameen Trust with the support of the World Bank has helped establish projects in 27 countries that had made loans to over a million people as of 2002. There have even been efforts in the US, including the Good Faith Fund in Arkansas backed by then Governor Clinton and the Full Circle Fund in Chicago, but welfare regulations in the US and Europe complicate matters considerably. There are now plans to reach the world's poorest 100 million families with micro-credit and to eliminate poverty altogether.
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on December 8, 2015
I am a University of Baltimore student enrolled in the survey Entrepreneurship course and this was a recommended reading. Yunus' Banker to the Poor is an excellent read for entrepreneurship students who would like to not only make themselves rich or profitable but to also help out those within there community. Helping those in need to get out of poverty. What I really like about this book was the how the focus was on the women in Bangladesh who make up a huge percent of the poor. Banks there are would not loan to women without the consent of a man, especially their husbands. The gist of the book is to give loans to the poor so they can start their own businesses without charging a ridiculous amount of interest. I have no negative things to say about the book. We only read two novels in my class and I liked one more than AIS, this was not fiction and much of an eye opener.
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on March 23, 2013
I work with a non-profit that is starting micro loan programs in Kenya so Yunus' book was a required read. You get an appreciation for the economic underpinnings of his forward thinking that go along with the practical advise that comes from years of experimenting with the concept. If you have compassion for the truly needy and understand that we all benefit from raising the quality of life of our poorest members, here's a blueprint to make a permanent differnce yet avoid the trap of providing just a handout.
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on August 8, 2007
This book is a testament to the good one can do to millions of people!

Poverty belongs in museums! One day, thanks to humanitarians like Muhammad Yunus, poverty will be something of the past and totally extinct, and the next generation will wonder how poverty was ever allowed to exist within our midst. Indeed that will be a glorious day!

Professor Yunus recounts his early life living in India, Bangladesh, and then in the United States. He was born in 1940 in British-ruled India. He was one of fourteen children born to devout Muslim parents. His mother was often ill, but despite this, his father never left her. Yunus later obtained a scholarship to study in the States, earned a Ph.D. in economics at Vanderbilt University, and later became a professor. He once commented to his students, "What good were all my complex theories when people were dying of starvation on the sidewalks and porches across from my lecture hall? Nothing in the economic theories I taught reflected the life around me."

As a young man he was very involved in the independence of Bangladesh when hundreds of thousands died, and many more after Bangladesh declared itself independent. The country was devastated, and stripped of its natural resources. Professor Yunus quickly left the US and headed to Bangladesh in order to help create a government, and thus get international help and support.

He was very concerned about the poor, and decided to help them. He was surprised why banks did not lend them money. Also the majority of the poor couldn't write or read, so they couldn't even fill out the forms required by banks in order to obtain a loan.

Grameen Bank (The name means the "bank of the village") was thus started in 1976 as an experimental project to combat rural poverty by providing credit to the very poor. Professor Yunus loaned $27 from his own pocket to forty-two stool makers living in a tiny village. These women only needed enough credit to purchase the raw materials for their trade. Yunus's small loan helped them break the cycle of poverty for good. Throughout the book you'll read of many such success stories.

Professor Yunus faced a lot of obstacles in creating his bank. He was accused by the Muslim clergy (Mullahs) of wanting to destroy Islamic traditions, and of promoting Christian values in Bangladesh. Some of his staff were even threatened. This was due to the fact that the bank encourages women to take loans and work, something of a taboo and highly unacceptable to Muslim women living in Bangladesh. In fact, many women were beaten by their husbands for the mere mention of money, let alone taking a loan. Women were also not encouraged to receive an education or work. Professor Yunus says, "All her life she has been told that she is no good, that she brings only misery to her family, and that they cannot afford to pay her dowry. Many times she hears her mother or her father tell her she should have been killed at birth, aborted, or starved. But today, for the first time in her life, an institution has trusted her with a great sum of money. She promises that she will never let down the institution or herself. She will struggle to make sure that every penny is paid back (65)."

In 1983 Grameen Bank (GB) was officially established. It is unique in that it has reversed conventional banking practices by removing the need for collateral and created a banking system based on mutual trust. It promotes credit as a human right. Its mission is to help the poor families to help themselves to overcome poverty by issuing them with microcredits (very small amounts, like $7, something a conventional bank would never do). It is offered for creating self-employment for income-generating activities and housing, as opposed to consumption. It is particularly targeted towards poor women. It provides service at the door-step of the poor based on the principle that the people should not go to the bank; the bank should go to the people. This principal is helpful in a Muslim society where women are not allowed to leave their homes without the approval of their husband, and are not allowed to speak with men.

In order to obtain loans a borrower must join a group of borrowers, with each borrower recommending another. If one member of the group defaults on payment of his loan, then the whole group is denied further loans! However, to encourage destitute members to join, he/she does not have to belong to a group, no saving is necessary, no weekly repayment is necessary, his/her loan terms are decided by him/her, in consultation with his/her mentor.

A member is considered to have moved out of poverty if her family fulfills the following criteria:

1. The family lives in a house worth at least Tk. 25,000 (twenty five thousand) or a house with a tin roof, and each member of the family is able to sleep on bed instead of on the floor.
2. Family members drink pure water.
3. All children in the family over six years of age go to school or have finished primary school.
4. Minimum weekly loan installment of the borrower is Tk. 200 or more.
5. Family uses sanitary latrine.
6. Family has adequate clothing for everyday use and for winter, and mosquito-nets.
7. Family has sources of additional income, such as a vegetable garden, so that they are able to fall back on these sources of income when they need additional money.
8. The borrower maintains an average annual balance of Tk. 5,000 in his/her savings accounts.
9. Family has three square meals a day throughout the year. No member of the family goes hungry any time of the year.
10. If any member of the family falls ill, family can afford to take all necessary steps to seek adequate healthcare.

Professor Yunus distrusted dealing with the World Bank. According to professor Yunus, the world bank, with its headquarters away from Bangladesh, does not see poverty, but relies on theories. He also was wary of how they took full control of a country's financial needs.

There were a number of major natural disasters in Bangladesh. The 1998 flood was the worst of all. Half of the country was under flood-water for ten long weeks. Grameen borrowers lost most of their possessions including their houses because of the flood. Soon borrowers started to feel the burden of accumulated loans. They found the new installment sizes exceeded their capacity to repay. Grameen Bank repayment started to show quick decline. This was a good opportunity to design a new Grameen methodology, incorporating all the lessons learnt. As a result, Grameen Bank II was created.

The bank believes that the poor always pay back their loans, unlike the very rich. On some occasions they may take longer time to pay back than it was originally stipulated. Many things can go wrong for a poor person during the loan period. According to professor Yunus, since the borrower is paying additional interest for the extra time, where is the problem?

Grameen Bank has introduced higher education loans for all students who can enter into the higher educational institutions (medical, engineering, etc). Students are made responsible to repay the loans when they start earning. Half the scholarships are reserved for girl students. The remaining 50 per cent is open for both boys and girls. Each year Grameen Bank gives out 3,704 scholarships.

Grameen believes that poverty is not created by the poor; it is created by the institutions and policies which surround them. In order to eliminate poverty, all we need to do is to make appropriate changes in the institutions and policies, and/or create new ones.

Muhammad Yunus and his Grameen Bank of Bangladesh won the 2006 Nobel Peace Prize.

As of May, 2007, Grameen Bank had 7.21 million borrowers, 97 percent of whom are women. With 2431 branches, it provides services in 78,659 villages, covering more than 94 percent of the total villages in Bangladesh.

About 3 billion people live on less than $1 per day. Professor Yunus' vision is of eliminating poverty by 2050.

This is really a fascinating book and I highly recommend it.
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on November 16, 2011
This is a fascinating book. It represents a wonderfully radical view of a company's role in society. I find that Grameen Bank's mission is so contrary to the function of companies in American society. The fact that the Grameen board is comprised of 9 of 14 people who are illiterate and came from poverty is tremendous. What an achievement. Grameen is a profitable growing concern. This shows the poor are not fairly valued!

I do think there are differences to consider when evaluating in a first world context. Consider that Bangladesh's government and America's government are very different. American government has demonstrated the efficacy of its social programs. Social Security works and helps millions of the elderly avoid destitution. From my reading, Bangladesh's government still is not able to achieve something of that caliber. At Grameen Bank's inception, banks in Bangladesh did not have the means to even profitably extend a loan to the poor. The cost of the infrastructure of lending exceeded the benefit. Usury in the villages was rampant. So the opportunity for Grameen was immense.

That said, there is so much to learn here. The fundamental message is that companies should consider how their products benefit communities. That is the key measurement and the game changer.
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