Microcredit is a representative case of social finance, a financial model that helps low-income groups and the financially vulnerable achieve self-reliance by providing small loans.
[Microcredit Ⓟ ESG.ONL/ESG Today]
Beginning in the 1970s with the Grameen Bank founded by Dr. Muhammad Yunus in Bangladesh, microcredit provided small loans to women and the poor without credit scores or collateral based on trust, opening opportunities for entrepreneurship, livelihood, and education. Women and the poor were able to start small businesses and livelihood activities with this money, and in the process of repaying the loans, they regained confidence and trust as members of the community. The Grameen Bank and Dr. Yunus, who presented a new path of ‘finance for self-reliance,’ were recognized for this contribution and awarded the Nobel Peace Prize in 2006.
Institutional finance, which determines loan eligibility solely based on credit scores, finds it difficult to embrace multiple debtors, the financially vulnerable, and local small business owners. What microcredit provides to these people is not simply money but hope that they can overcome difficulties and dream of a future as members of society.
Microcredit was subsequently adopted by various countries in forms adapted to their own circumstances and became a financial model representing social finance. The Together Making the World (Social Solidarity Bank), a non-profit incorporated association, introduced microcredit in the immediate aftermath of the IMF crisis and currently provides unsecured, low-interest small loans to youth preparing for independence and small business owners. In this way, the Social Solidarity Bank is continuing social finance activities to resolve financial blind spots by providing small loans to multiple debtors, small-scale small business owners, and financially vulnerable youth.
by Editor O