Examining The Gremeen Bank Economics Essay

In 1976, the economic sciences professor Dr. Muhammad Yunus starts the Gremeen Bank research undertaking in the small town of Jobra, Bangladesh. In 1983 the research undertaking is transformed to an official bank that is Gremeen Bank, it is the first bank specially provides loans to the hapless for self-emplyment in the universe ( Papa at al. , 2006 ) .

Gremeen bank has reversed traditional banking pattern, its purpose to relieve poorness through recognition and better the life style and wellbeing of the hapless, so it chiefly serves to and owns by the hapless, peculiarly the poorest of the hapless adult females ( Khalily at al. , 1995 ) , besides it provides the micro-loans to hapless without collateral and legal instrument, and creates “ a banking system based on common trust, answerability, engagement and creativeness ” ( Gup, 2003 ) . The Gremeen Bank believes the hapless besides have the cardinal human right to possess recognition ability.

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In add-on, the initial demand is the borrowers need to organize a group of five people who have similar economic background and aims ( Costa & A ; Noble, 1999 ) . Taub ( 1998 ) believes the group can supply the moral support, encouragement and advices to each other ; besides group societal force per unit area can promote refund, because defaulting by one group member leads to loss of entree for all members.

Gremeen Bank is more than merely a bank. It sets up the conditionality which is Sixteen Decisions ( Appendix 1 ) to the borrowers to motivate sustainable societal development, such as sanitation and wellness. These determinations besides increase worker productiveness and income ( Costa & A ; Noble, 1999 ) .

The above unconventional attacks of Gremeen Bank increase the chance of prompt refund and heighten inducement to keep the success of the bank.

Gremeen Bank is really success to run the micro-credit plan in the Bangladesh. In 2009, it provides services in 84,096 small towns, covering more than 100 per centum of the entire small towns in Bangladesh ( Gremeen Bank, 2009 ) . Nowsaday, the micro-credit mechanism of Gremeen Bank is a popular non-market instutitional signifier in the universe due to its high refund rate ( Mushinski & A ; Pickering, 2001 ) . now there are houndreds of plans in developing and industrialised states, such as Malaysia, Philippines and Canada ( Anderson & A ; Looney,2002 ) . The United Stated was the first industrialised state which uses this mechanism to turn to the receivers of public aid and to cut down poorness ( Anderson & A ; Looney,2002 ; Friedman et al. , 1995 ) . It is really spatial and attractive thought that a rich state can larn the worthable cognition and experience about doing wealth from a hapless state. However, there are some cultural jobs and impacts when the micro-credit plan applies in the United Stated.

First, the micro-credit mechanism is came from the 3rd universe, Bangladesh, so the American elites are hard to accept that, because even the successful policies or schemes from the close states, such as Canada, Grermany and England, the American people besides accept reluctantly ( Yunus & A ; Jolis, 1999 ) . The most sociologists, economic experts, bankers and communalist deem that the experience in Bangladesh is non related to extinguish the poorness in the United States, they think self-employment is merely a ageless primitive construct in the 3rd universe, the American people do non necessitate it ( Yunus & A ; Jolis, 1999 ) .

Second, since the plans is first debut in the United States, the staffs are unfamiliar with the local clients and local people, besides the staffs are white and non rural in background. Historically, the white people, particularly in the South, have non been known to do the micro-loan in the involvement of low-income African Americans ( Taub, 1998 ) . So they lack the accomplishments and experiences to cover with the hapless.

Third, in the United States or the universe, they normally use the gifts and public assistance grants to assist the hapless, they feel unusual about turn outing the loan to assist the hapless cut downing the poorness ( Taub, 1998 ) .

Fourthly, base on the population densenesss, employment wonts, and community outlooks, borrowers is hard to organize a group with four friends who want to get down a similar concerns ( Taub, 1998 ) . The group is consist of four to five aliens who have known each other in the few hebdomads trainning. This grouping reduces the map of group prssure, Edgcomb et Al. ( 1996: p.41 ) supports that,

Group-lending attacks in the United States do non transport with them the efficiencies anticipated by the public presentation of equal plans in the underdeveloped universe.

In add-on, groups in the United States tend to interrupt down because of “ deficiency of societal capital ” , “ persons with a good recognition record can acquire loans on their ain ” and “ the lucks of members diverge through clip ” ( Schreiner & A ; Woller, 2003: p.1568, 1570 ) .

Fifthly, the deterrence is due to welfare payments to either borrow or refund loans ( McDonnell, 1999 ) . United States is a public assistance province, different public assistances provide to the citizen, includes the hapless people. The borrowers have an effectual societal security cyberspace to fall back on, unlike borrowers in Bangladesh where defaulting borrowers are reverted to poverty, so this societal protection indirectly causes a high default rate in the United States. Besides, Disincentives to borrow loans are caused by the public assistance Torahs which guarantee that one time a individual earns above a certain sum of income, the benefits received from public assistance payments lessening.

Sixthly, there have abundant pay occupations and an effectual societal security cyberspace which decrease the motive to recognition for self-employment in the United States ( Schreiner & A ; Woller, 2003 ) . Besides, the economic system of United States is well-integrated with planetary markets ; the micro-enterprises are hard to vie with the big companies or concatenation shops, because they lack the capital and support to last in the ferocious competitory market. Furthermore, income from micro-employment is frequently low because most hapless enterprisers choose the concern with low degrees investing and low barriers ( Bates, 1997 ) . Besides, accepting public aid or making the pay occupations are less attempt and hazard than self-employment, if neglecting the concern, they will bear a liability and go more poorness.

Base on the civilization difference, although Gremeen bank is really successful in the Bangladesh, it besides has some jobs when following in other states, such as United States. The Gremeen Bank plan is an effectual method to relieve poorness, so harmonizing to the local civilization background doing some accommodations to the plan before adoptation, it will use success in all states.

Literature Review

This appraisal is focus on Hofstede, Trompenaar and Herskovits ‘ cultural dimensions to lucubrate the civilization difference in different states.

Hofstede undertakes an tremendous questionnaire study of 116,000 IBM employees in 50 states to understand how basic values underlie organisational behaviours and attitudes ( Deresky, 2000 ) . He proposes four value dimensions: ( 1 ) power distance, ( 2 ) uncertainness turning away, ( 3 ) individuality versus Bolshevism, and ( 4 ) maleness versus muliebrity.

Trompenaar spends 10 old ages in researching value dimensions by researching 15,000 directors from 28 states, stand foring 47 national civilizations ( Deresky, 2000 ) . He proposes seven value dimensions: ( 1 ) universalism versus particularism, ( 2 ) impersonal versus affective, ( 3 ) particular or diffuse, ( 4 ) accomplishment versus attribution, ( 5 ) individuality versus communitarianism, ( 6 ) clip, and ( 7 ) the environment.

Herskovits ( 1995 ) offers five values to separate the United States civilization from other modern-day civilizations. The five values are ( 1 ) individuality, ( 2 ) informality, ( 3 ) philistinism, ( 4 ) alteration, and ( 5 ) clip orientation.

From the above three chief theories, the writer proposes to unite the theories of Hofstede and Herskovits into Trompenaar ‘s seven dimensions. Because Hofstede merely researches the IMB which is an information engineering company, and Herskovits is base on American people to specify his dimensions, both of their researches seem really narrow. Besides, Sondergaard ( 1994 ) pointes that informations collected to Hofstede ‘s survey between 1968 and 1973 are no longer valid, it is non suited to utilize one company as a footing for decisions about national dimensions, and the usage of attitude studies does non represent a valid footing for this type of research. Others, like McSweeney ( 2002 ) argues the Hofstede ‘s cultural dimensions are based on blemished premises. In add-on, the universe is altering, since Hofstede ‘s surveies in the 1970s, Trompenaars pay much attempt and clip in the different civilizations research, and he does a comprehensive and update survey to measure national civilizations in 1993, the seven dimensions.

The first of these cultural dimensions is universalism versus particularism. Harmonizing to the theories of Deresky ( 2000 ) , universalism beliefs that thoughts and patterns can be applied everyplace in the universe without alteration, the universalistic attack is more nonsubjective and concentrate on the regulations, systems, contract and personal duty. This dimension is in direct contrast to particularism. Particularistic attack is more subjective and focuses on relationship ; it is more common in Asia.

The 2nd dimension is impersonal versus emotional, the focal point is on “ emotional orientation of relationships ” ( Deresky, 2000 ) . In high impersonal civilization states, such as Japan and British, people try non to demo their feelings. While in high emotional states, such as China and Mexicans, people are enthusiastic, they openly express emotions even in a concern state of affairs.

The 3rd dimension is specific versus diffuse, the focal point is on the “ engagement of relationship ” ( Deresky, 2000 ) . In specific civilizations, people clearly separate the work personal issues and relationships, they portion merely with close friends and associates, and they are more unfastened, confrontational and extroverted, such as United States and Austria. Conversely, in diffuse civilizations, the populace and private infinites are similar in size, which means the work and private life normally are closely linked, people tend to indirect and introverted, such as China and Spain.

The 4th dimension is achievement versus attribution, it examines “ the beginning of power and position in society ” ( Deresky, 2000 ) . In achievement civilization, the position is base on how good people perform their maps, therefore everyone has equal chance to achieve places establish on their accomplishments and abilities, such as United States and Austria. In ascription civilization, position is base on whom or what a individual is, such as their category, age, gender and so on, such as China and Indonesia. Hofstede ‘s masculine dimension besides concerns on the power, money and position. Herskovits ‘s philistinism dimension references certain physical objects represent the position in the western.

The 5th dimension is individualism versus communitarianism, Hofstede, Trompenaar and Herskovits, all of them propose that the cultural dimension includes individuality. Individuality refers to the “ inclination of people to look after themselves and their immediate household merely and pretermit the demands of the society ” ( Deresky, 2000 ) . In states high on individuality, such as United States, Great Britain and Canada, democracy, single enterprise, achievement, accomplishment and wealth are extremely valued and motivated. This dimension is in contrast with communitarianism, this dimension like the Hofstede ‘s Bolshevism, people regard themselves as portion of a group, such as China and Malaysia. Hofstede finds that richer states were higher on individuality and hapless states were higher on Bolshevism.

The 6th dimension is clip ; there are two attacks in the clip issue. In consecutive attack, people do merely one activity at a clip ; prefer to step by measure to make the work and maintain the assignment purely. Herskovits ‘ clip orientation dimension, it mentions the western perceives “ clip as resource and an highly 1 ” , so they emphasize the effectual usage of clip, they are “ really fastidious about doing and maintaining assignment ” ( Herskovits, 1995 ) . In synchronal attack, people tend to multi-task and view assignment as approsimate. Herskovits references the Eastern civilization position clip as an “ limitless and ageless beginnings ” , so they are rather insouciant to maintain assignment. Besides, people view clip as present oriented or/and hereafter oriented, such as United States focus on future, Indonesia focal point on present, France focal point on both.

The concluding dimension is the environment which includes inner-directed and outer-directed. In inner-directed societies, such as United States and Australia, people believe in commanding results. In Herskovits ‘ alteration dimension references that Western people believe they have the capable to pull strings and alter the environment. In outer-directed societies, such as China and many Asiatic states, people believe on allowing things take their ain class. Besides Herskovits points non-Western people view alteration as “ a phenomenon that occurs of course ” .

Although Hofstede ‘s cultural dimensions are criticized by several critics, the dimensions is popular in the universe. And Herskovits ‘s cultural dimensions is basal on United States to develop, it is tend to the America, so the dimensions may has prejudice, but this appraisal is to analyse the civilization difference between the Asia and United States, so it may useful in at that place. Therefore, it is really suited for utilizing the theories of Hofstede, Trompenaar and Herskovits in this appraisal.

In drumhead, Trompenaar identifies the United States as an individualistic state, high in universalism, specific, achievement and inner-directed, concentrate on consecutive attack and future clip, similar in impersonal and emotional dimension.

Besides, Trompenaar identifies the Asia as a communitarianistic state, high in particularism, emotional, diffuse, attribution and outer-directed, concentrate on synchronal attack.


The Gremeen Bank in Bangladesh is an international icon of grassroots hapless organizing, which motivates the hapless, homeless, landless, and vulnerable rural populations to come together, earn income through self-employment, and better their socioeconomic conditions ( Auwal & A ; Singhal, 1992 ; Fuglesang & A ; Chandler, 1988 ; Yunus & A ; Jolis, 1999 ) . The mechanism of Gremeen Bank has become really popular in the United States as a tool to “ travel low income people off public assistance ” and to go a micro-entrepreneur ( Taub, 1998 ) . However, some of the cultural jobs should be tackled to guarantee the plan win in the United States. The below analyze and measure the jobs which come from the civilization difference between Asia and United States.

First, when the American people hear to use the micro-credit mechanism which come from the Bangladesh, they scoff and deem the mechanism is impossible to run in the United States. Because United States is defined as holding individualistic, achievement dimensions. They seek position, money and power. So they are hard to accept the Third World ‘s mechanism, credence means they identify the Bangladesh is outperform than them. Their self-respect do non let them to accept that. mechanism.

Second, since the staffs are the white and sourth Amerian, they normally live in the metropolis and be given to rich. The borrowers live in rural country and are hapless. They live in different environment. So cultural background is different that lead the staff hard to understand local clients and local people. In Bangladesh, they has rich experiencement and good understanding the local people, so they run the plan easy and swimmingly. In add-on, the American people are individuality, they normally look after themseleves, so they are unfamiliar to assist others. While Asiatic is corporate, they tend to look after people.

Third, the United States is inner-directed in the environment demension, they believe they can command the environment and result. Besides, United States with high universalism, they follow the formal regulations and legal system objectively. Therefore when the micro-credit plan introduce in the United States, it is unusual, they fear that they can non command the plan, and the plan is conflict to the consistent constabularies, they are non acquire used to turn out the loan to assist the hapless, because they ever distribut the gifts and grants to assist the hapless, so the plan allow them can non follow.

Fourthly, the United States is high on individuality, they tend to look after themselves, actuate single enterprise, achievement, and they prefer to work independently, so they are hard to work in a group. Deresky ( 2000 ) references American people “ tend to execute less when working as portion of a group than when working entirely ” . Thus the grouping system may non sutible in the United States. While the Asia is high on communitarianism, they focus on the will of group instead than that of the person. So the grouping system is effectual in the Bangladesh. In the other manus, Low population denseness is a job to organize group, but if people join the micro-credit plan to better their life status and make the on the job chance, so they do non necessitate to go forth their small town and so the population denseness can increase. United States is international market, so the people can take many type of occupation, and they will anticipate more than the people in the Third World. They unlike the Bangladeshi, they can easy to organize a group in their community. Besides, the individuality let the American people stand entirely, so they are hard to organize a group with five friends who want to get down a similar concerns. Whereas Asian is particularistic and communitarianism, they are more willing to portion the information and trust each other. They focus on the group and relation. So the group signifier and group force per unit area are work good in the Bangladesh. In add-on, the individuality and achievement dimensions, the American people work hard separately to accomplish their ends, so “ the lucks of members diverge through clip ” ( Schreiner & A ; Woller, 2003: p.1568, 1570 ) .

Fifthly, United States is a public assistance province, it provide an effectual societal security cyberspace to the people. So the hapless people are non willing to take hazard to borrow the micro-credit for self-employment. United States high on individuality, the American people merely take attention themselves and pretermit the society. Because they do non care others and merely concentrate on their ain benefit, so they may default the loan, so allow other members can non have the loan. Therefore, the authorities need supply more public assistance and safety cyberspace to protect them. Whereas Asia high on communitarianism and particularism, the Asiatic position themselves as a portion of group, they have interpersonal trust and duty to assist others. So in the community, they tend to assist each other, the Gremeen Bank helps and owns by the hapless people, there is another signifier to assist each other, they do non necessitate the authorities aid. Base on the United States and Asia hold different cultural dimensions, so the Gremeen Bank plan is more hard to run in the United States than the Bangladesh or other Asia states.

Sixthly, the United States and Asia are low uncertainness turning away, they may eager to accept hazard, but the American people are non willing to take hazard for self-employment through recognition. Because the individuality, the American people are single and independent, so they lack the proficient and emotional support from others or the community. Self-employment is new construct to them, they are unfamiliar the self-employment signifier. Besides, if they earn money they will diminish the welfare payment. So they are unneeded to take the hazard to recognition the loan for self-employment. They think that it would be better to pay less attempt and hazard to accept the sound societal public assistance. But in Asia, they have their members to assist and back up them ; besides self-employment is non merely profit themselves, besides benefit the society, it can advance the concern activities.

Trompenaar ‘s seven cultural dimensions are chiefly used in the above analysis, the writer merely use four dimensions, there are two dimensions, specific versus diffuse and clip, are non used in this state of affairs.

Decision and Recommendations

Different states have different civilization, the civilization struggle or difference will act upon the cross state concern and communicating. Even if the United States and Asia have different background and civilization, but their aim is same, both of them want to cut down the poorness and better their socioeconomic status. Whereas Gremeen Bank theoretical account successfully assist the Bangladesh to relieve the poorness and better the life quality. Besides the mechanism of Gremeen Bank acquires other states ‘ acceptance. So the mechanism besides is suited for the United States. In order to successful and effectual runing the mechanism in the United States, there should necessitate some accommodation to cover with the cultural jobs. There are some recommendation to work out the civilization jobs in United States and Asia.

American people should see the Bangladesh to detect and analyze their patterns and status. Besides they can portion the experience and position to clearly understand the operation and successful factors. Then they can sum up the civilization difference between the two states thereby to happen out the solution.

Furthermore, United States is a developed state, it has high engineering and endowments, it can develop many good things to better or upgrade their life quality, but most of that are non used for the hapless. Although Bangladesh is a underdeveloped state, it is genuinely understand the demand and privation of the hapless people, so it can develop the effectual mechanism to assist the hapless. So American people should accept the true and learn from the Bangladesh.

Furthermore, American people seek the wealth and personal accomplishment, they ever omit others. Nowsaday, United States is one of the most rich state, the American people should set more concern to others, to develop a good societal relationship.

In add-on, the public assistance constabulary should modify. Because it block the hapless people to develop their micro-enterprise. For illustration, the public assistance organisations should supply a specific clip frame for the new self-employment people to seek their concern, in the period they will non lose their public assistance.

Finally, the size of group should more elastic. Base on their capacity and background, they can take to recognition separately, or by group, besides the figure of members in group are non fixed.

In concluded, civilization is really related to our life and work. Understanding different cultue aid to acquire along or pass on good with others, besides help to win in concern.

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