Chickens and Cows are the Solutions to the Financial Crisis?

By Yulun Hung

As banks are becoming fearful of lending money to people with little money, Nobel Prize winner Muhammad Yunus believes microfinance lending to the poor can return our economy to health. Yunus thinks loans of much smaller size, backed with less valuable assets such as chickens and cows, can increase the flow of capitals.

Muhammad Yunus says his formula can work all over the world, even in developed countries such as the United States. To prove his statement, Yunus cites the success of his latest creation, microfinance bank, Grameen Bank. The bank has lent out $6 billion to date with 8 million borrowers each month, paying it back 99% of the time. The 99% doesn't change even in high unemployment and poor neighborhoods, such as Jackson Heights, New York.

Muhammad Yunus critized current government actions of trying to solve the financial crisis. Many economists and bankers argue Yunus' solution is unrealistic, but the fact is Grameen Bank has more solid profolios of loans than many big banks. In conclusion, Muhammad Yunus once said, "The solution is for the market to find a solution, not for the government to bail out a defective system."

Sources:

http://www.forbes.com/2009/03/18/Yunus-Microfinance-grameen-markets-economy-loans.html

http://muhammadyunus.org/content/view/164/128/lang,en/

http://www.businessweek.com/innovate/content/oct2008/id20081013_307979.htm?campaign_id=rss_daily