University of Toronto Magazine University of Toronto Magazine

Can a Bank Change (the World)?

Financial institutions that issue "micro-loans" are changing millions of lives in the developing world

A banker may not be the kind of person you’d expect to herald a revolution. But New York journalist David Bornstein, who in March delivered this year’s Hart House lecture, says “social entrepreneurs” such as Bangladeshi professor-turned-financier Muhammad Yunus are helping to usher in important social and economic reforms around the globe.

Yunus is the founder of Grameen Bank in Bangladesh, a financial institution that lends very small amounts of money to people who want to start their own business. Recipients use the funds – “micro-loans” – to invest in everything from mortgages to rickshaws to cows. Now with more than four million borrowers, the bank has helped many Bangladeshi families improve their economic and social situation.

Bornstein, the author of How to Change the World: Social Entrepreneurs and the Power of New Ideas (Oxford University Press, 2003), says social entrepreneurs such as Yunus are addressing issues from homelessness to education with the single-mindedness and innovation normally associated with successful business leaders. What motivates them is a personal commitment to fight injustice, he adds. Yunus started Grameen Bank after meeting a woman who said she was being exploited by a moneylender.

Social entrepreneurs often approach problems by identifying opportunities and resources that others overlook, and by working with people in creative new ways. Grameen Bank does not require collateral to approve loans because its innovative peer-lending approach is highly reliable. In Hungary, Erzsébet Szekeres hires staff for her “living centres” for the disabled based on their empathy – not institutional experience. J.B. Schramm’s college prep program in the U.S. was inspired by four inner-city students in need, and is largely run by volunteers and former students of the program.

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