Paper
Money is Not Enough: Social Capital and Microcredit
Has microcredit proved to be the panacea for the twin US economic ills of poverty and inequality?
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12 pages
This paper discusses the applicability of microcredit as an anti-poverty program in the United States, and assesses its ability to address the US economic ills of poverty and inequality.
The paper discusses the following in detail:
- Origin and methods of microcredit;
- Appeal of microcredit;
- Success of microcredit in Bangladesh.
It illustrates the following attempt to replicate the Grameen model:
- An urban US replication;
- A rural US replication;
- Replication on the Pine Ridge Indian Reservation.
The paper finally concludes that:
- Peer-lending model of the Grameen Bank is simply not sufficient to ensure a microcredit program's success;
- Possibilities for implementing microcredit as an instrument against poverty and inequality in the United States are limited but not nonexistent;
- Access to credit in support of small-scale entrepreneurship may help some individuals to enjoy increased standards of living but will not produce results as a development plan;
- Microcredit will be most effective when utilized by those already involved in entrepreneurial activities, rather than as a means of coaxing the uninitiated into self- employment;
- Programs in the US, which are more expensive to implement due to the necessity of training functions, have no hope of attaining self sufficiency through interest returns and loan portfolios;
- Microcredit must be subsidized by either the private or the public sector.
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