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A Cost‐Effectiveness Analysis of the Grameen Bank of Bangladesh
Author(s) -
Schreiner Mark
Publication year - 2003
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/1467-7679.00215
Subject(s) - subsidy , microfinance , liberian dollar , value (mathematics) , investment (military) , economics , social cost , economic surplus , business , public economics , economic growth , finance , microeconomics , market economy , welfare , political science , machine learning , politics , computer science , law
Reports of the success of the Grameen Bank of Bangladesh have led to rapid growth in funding for microfinance. But has the Grameen Bank been cost‐effective? This article compares output with subsidy for the bank in a present‐value framework. For the timeframe 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 article does not measure consumer surplus for Grameen users, the evidence in the literature suggests that surplus probably exceeds subsidy. The Grameen Bank — if not necessarily other microlenders — was probably a worthwhile social investment.