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Grameen Banking System Alleviating Poverty


Muhammad Yunus, Nobel Prize winner, is the founder of the Grameen banking system; he had the aim of elevating poverty through financial empowerment of the poor in the society. The idea is moving fast in developing and developed countries. This paper discusses various aspects of the Grameen banking system. It will focus on how it has assisted communities and evaluate their future success.

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Grameen banking system

Grameen banking aimed to alleviate poverty by financially empowering the less fortunate in society. Women have benefited from the scheme and are increasingly changing their traditional role; they can participate in decision making.

One of the major reasons quoted why the poor have had a large number of children than the rich is because of the lack of economic activities they can do. With microfinance, they are empowered, and thus they have economic things to do other than getting children. Secondly, traditionally, especially in developing countries, the role of a woman has been to bear children. The role has changed since they can assess loans and participate equally indecision of whether to get children or not. They have opted to have few children.

The approach taken by the bank is a bottom-up approach; this is effective since in developing countries the majority of the people are either below the poverty line or slightly above the line? This population has no securities required to secure loans from conventional banking systems however, they have the will and ideas that need to be nurtured and financed. It is important to consider those at the bottom of the pyramid because;

  • They are the majority
  • They can be trusted to repay the loans
  • When they are empowered, they will offer market to local industries
  • To elevates, poverty and they are the driving force of the economies
  • To release dependency burden to the working class and the government

If implemented in the United States, would this system help alleviate abject

Poverty in rural populations as well as inner cities of the United States?

If the system is adopted in the United States, it would help in poverty reduction. It is so because the poor will be financially empowered to start projects that can bring economic benefits to them. They will benefit from advanced technology in the country. When people have something to do, the rate of social crime will reduce, the unemployment rate will reduce, and, thus, the government will have some finances (those which were previously used to maintain the unemployed) for other developmental projects the country benefits as a whole.

International Monetary Fund should reach out to the poor rather than the wealthy middle-class. The focus of the IMF should reach poor people, especially in developing countries, and empower them to move to the middle class. It is because the wealthy middle class having already developed assets that they can use to secure loans in the conventional banking system. The poor, which are the majority have no assets and thus should be given funded more through IMF programs. With this, the economy will grow in unison. Equality will be attained.

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Politicians should adopt the Grameen banking system. It is because the benefits brought about by the Grameen banking system have proved that poverty can be reduced if the poor in society are given financial assistance. The poor have ideas that need to be financed instead of relying on the government for help. With the system the role of the woman has changed; she is empowered to make decisions in the family something that had been left for men. When both men and women are empowered, then the entire family will have developed a financial base, children will go to school, and the entire country stands to benefit.

The Grameen banking system should be implemented in both developed and less developed countries. Resources are not equally distributed in either developed or developing countries. In each of them, there is a potion of the poor who do not have solid securities to secure loans in the conventional banking system. They need to be empowered. The following are modifications and improvements to be made;

Have a graduating policy where with time groups are split into smaller groups until everyone stands alone.

  • Develop a credit history database to be shared by all banking sector when accessing micro-borrowers.
  • Increase the amount that a borrower can get.

There is an influence in families that have embraced the Grameen banking system. They have been empowered by and resulted in increased living standards; they have been able to educate their children and made them better people in society. They have adopted family planning methods, and the number of children they are getting has reduced. The few children are given a modern lifestyle where they can attend good schools and good living conditions. Some families have been able to buy assets and are continually engaging in conventional banking.


Grameen banking is a system that focuses on helping the poor by offering flexible micro-loan facilities to assist them in their daily businesses. It works differently from conventional banking since it does not require a borrower to have assets to get a loan but depends on the goodwill of the borrower. Families adopting the system are getting fewer children and are financially empowered.

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StudyCorgi. (2021, February 4). Grameen Banking System Alleviating Poverty.

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"Grameen Banking System Alleviating Poverty." StudyCorgi, 4 Feb. 2021,

1. StudyCorgi. "Grameen Banking System Alleviating Poverty." February 4, 2021.


StudyCorgi. "Grameen Banking System Alleviating Poverty." February 4, 2021.


StudyCorgi. 2021. "Grameen Banking System Alleviating Poverty." February 4, 2021.


StudyCorgi. (2021) 'Grameen Banking System Alleviating Poverty'. 4 February.

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