Bangladeshi economist Muhammad Yunus is considered to be the inventor of microfinance. Starting with a small loan from his own pocket to a desperately poor woman in 1974, his Grameen Bank (established 1983) combats unreasonably high interest rates and provides credit to the poorest of the poor. Today, it has grown to serve 2.1 million borrowers. Born in 1940 in Chittagong, the financial center of then Eastern Bengal, Yunus received his M.A. in Economics at Dhaka University in 1961. As a Fulbright scholar he earned his Ph.D. in Economics at Vanderbilt University in 1969. Three years later he returned to Bangladesh to become head of the Economics Department at Chittagong University. In this function he designed a plan for the participation of rural people in local government. This idea was eventually adopted by the Bangladeshi government. Professor Yunus has served on many commissions to wipe out poverty and stimulate development, including the Advisory Council for Sustainable Economic Development and the UN Expert Group on Women and Finance. In 1997 he presided over the world’s first Micro Credit Summit in Washington, DC.
The Grameen Bank is founded on principles of trust and solidarity and has a recovery rate for loans of 98 percent, higher than any other banking system. It is primarily focused on women —94 percent of its customers— since they tend to be more responsible in financial matters and are more likely to share their earnings with their families than men. Today, the methods of the Grameen Bank are used in 58 countries, including developed countries such as the United States and The Netherlands. Professor Yunus is dedicated to making poverty disappear from the world, and has successfully rethought the economic relationship between the rich and the poor. In his own words: “Grameen is a message of hope, a programme for putting homelessness and destitution in a museum so that one day our children will visit it and ask how we could have allowed such a terrible thing to go on for so long.”