Money is Not Enough: Social Capital and Microcredit

This paper discusses the applicability of microcredit as an anti-poverty program in the United States, and assesses its ability to address the US economic ills of poverty and inequality.

The paper discusses the following in detail:

• Origin and methods of microcredit;
• Appeal of microcredit;
• Success of microcredit in Bangladesh.

It illustrates the following attempt to replicate the Grameen model:

• An urban US replication;
• A rural US replication;
• Replication on the Pine Ridge Indian Reservation.

The paper finally concludes that:

• Peer-lending model of the Grameen Bank is simply not sufficient to ensure a microcredit program's success;
• Possibilities for implementing microcredit as an instrument against poverty and inequality in the United States are limited but not nonexistent;
• Access to credit in support of small-scale entrepreneurship may help some individuals to enjoy increased standards of living but will not produce results as a development plan;
• Microcredit will be most effective when utilized by those already involved in entrepreneurial activities, rather than as a means of coaxing the uninitiated into self- employment;
• Programs in the US, which are more expensive to implement due to the necessity of training functions, have no hope of attaining self sufficiency through interest returns and loan portfolios;
• Microcredit must be subsidized by either the private or the public sector.