Modern microcredit and micro loans

You can't really talk about micro-lending and microcredit with out mentioning Grameen Bank and Bangladesh.

Muhammad Yunus would later receive a Nobel Prize for using his own money to launch what would later become the Grameen Bank.

He gave small low-interest loans to the needy in the small town of Jobra beginning in 1983.

Later other organisations in Bangladesh would follow and the concept would spread across the world, with now hundreds of these organisations, attempting to duplicate the successes of the Grameen Bank.

The results have been somewhat mixed.

Undoubtedly some of the success of Grameen Bank is attributable to specific factors in the economic environment in Bangladesh.

Bangladesh has limited geography and very high population densities. This keeps administration costs quite low since Grameen branches can cater for very large numbers of loans in a small geographical area.

These environmental as well as cultural conditions are not exactly the same elsewhere and so, cookie-cutter attempts at replicating the Grameen bank principles have met with varied success.

What has become clear, in subsequent years, is that a "one size fits all" approach to micro loans and microcredit is not practical. Just because one methodology works under one set of circumstances does not mean it will work under others.

In fact, in some places and under some circumstances, microcredit is heavily criticized and deemed to have failed the poor by creating "debt traps" and other unwholesome dependencies.