In the past few decades, microcredit programs have been used throughout the Third World to promote grassroots entrepreneurship. The programs, which provide small-business loans of as little as $50, have helped literally millions of low-income people improve their material well-being. The Grameen Bank in Bangladesh, for example, has disbursed a total of more than $1.5 billion to about 2.4 million borrowers, with a default rate of less than 3%. Such figures have helped to convince many that poor people aren’t necessarily bad credit risks.
A version of this article appeared in the November–December 1999 issue of Harvard Business Review.