Grameen_CEA - A Cost-Effectiveness Analysis of the Grameen...

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A Cost-Effectiveness Analysis of the Grameen Bank of Bangladesh Mark Schreiner 2003 Center for Social Development Washington University in St. Louis Campus Box 1196, One Brookings Drive, St. Louis, MO 63130-4899, U.S.A. e-mail: schreiner@gwbmail.wustl.edu Abstract Reports of the success of the Grameen Bank of Bangladesh have led to rapid growth in funding for microfinance. But has Grameen been cost-effective? This paper compares output with subsidy for Grameen in a present-value framework. For the time frame 1983-97, subsidy per person-year of membership in Grameen was about $20, and subsidy per dollar-year borrowed was about $0.22. Although the paper does not measure consumer surplus for Grameen users, the evidence in the literature suggests that surplus probably exceeds subsidy. Grameen—if not necessarily other microlenders—was probably a worthwhile social investment. Acknowledgments This paper extends part of my doctoral dissertation. A later version is published in Development Policy Review , 2003, Vol. 21, No. 3, pp. 357–382. I am thankful for help from the editor, an anonymous referee, and from Asif Dowla, Leslie Enright, Claudio Gonzalez-Vega, Douglas Graham, Iftekhar Hossain, Mrinalini Lhila, Jonathan Morduch, Michael Sherraden, Jacob Yaron, and the Division of Asset Building and Community Development of the Ford Foundation. Author’s Note Mark Schreiner is a Senior Scholar at the Center for Social Development at Washington University in St. Louis. He studies ways to help the poor to build assets through improved access to savings and loans.
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A Cost-Effectiveness Analysis of the Grameen Bank of Bangladesh Abstract Reports of the success of the Grameen Bank of Bangladesh have led to rapid growth in funding for microfinance. But has Grameen been cost-effective? This paper compares output with subsidy for Grameen in a present-value framework. For the time frame 1983-97, subsidy per person-year of membership in Grameen was about $20, and subsidy per dollar-year borrowed was about $0.22. Although the paper does not measure consumer surplus for Grameen users, the evidence in the literature suggests that surplus probably exceeds subsidy. Grameen—if not necessarily other microlenders—was probably a worthwhile social investment.
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1 A Cost-Effectiveness Analysis of the Grameen Bank of Bangladesh 1. Introduction Microfinance—defined as efforts to improve poor people’s access to loans and saving services—may be the fastest-growing and most widely recognized anti-poverty tool. The 200 microfinance organizations surveyed in Paxton (1996) held 13 million loans worth $7 billion and 45 million savings accounts worth $19 billion. Growth will probably continue, and one movement seeks to establish credit as a human right and to raise $20 billion to provide microfinance to 100 million of the world’s poorest families by 2005 (Daley-Harris, 2002; Microcredit Summit, 1996).
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This note was uploaded on 09/10/2011 for the course ECON 101 taught by Professor Flah during the Spring '10 term at Punjab Engineering College.

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Grameen_CEA - A Cost-Effectiveness Analysis of the Grameen...

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