The Grameen Bank model has a borrower in a circle of 7-8 receive ~$40, immediately repay $4, then pay $4 weekly for 9-10 weeks, ending at $44 total — roughly 20-24% interest — which is expensive but far cheaper than a moneylender, and the group structure provides culturally appropriate enforcement.

factualpending

Speaker

Michael Munger

Evidence Quote

there's a group of us maybe a circle seven or eight and we decide that this is your month to get a loan and so we'll give you $40 you make an immediate payment back to us of four dollars

Source

Mike Munger on Microfinance, Savings, and Poverty 04/18/2011EconTalk
Created: 6/17/2026, 10:29:24 AM

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