The Diffusion of Grameen Bank in Bangladesh

Abstract

Despite many decades of efforts to alleviate rural poverty, the number of rural poor in developing countries is steadily rising. Amid the general gloom and doom of failed poverty-focused programs, one bright spot is the experience of the Grameen (rural) Bank in Bangladesh. The Grameen Bank represents a radical institutional innovation because it provides collateral-free loans and various social services to poor Bangladeshis yet maintains a loan recovery rate of 98 percent. Founded as an action research project in 1976, the Grameen Bank has diffused to 50 of Bangladesh's 64 districts. The bank now has over one million members, 92 percent of whom are women. Over the past 16 years, the Grameen Bank has created a formidable knowledge base and expertise to combat rural poverty. The present article investigates the process through which this new knowledge base was created, and how it has diffused in Bangladesh to alleviate poverty.