Which of the following is the compelling factor that produced a very high repayment rate of 98% in the concept of lending to groups of poor women, unitiated by Dr Yunus"?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Joint liability putting social pressure to repay loans.
Dr. Yunus's microcredit model for poor women achieved high repayment rates (98%) primarily due to joint liability. This system forms small groups where members collectively guarantee each other's loans. This creates strong social pressure within the group to ensure everyone repays, as default by one member can jeopardize future loans for the entire group. This peer monitoring and mutual accountability replaced traditional collateral, proving highly effective in fostering financial discipline among marginalized borrowers.