Overview

The Grameen America program uses a group microlending model that was pioneered by Nobel Peace Prize Laureate Muhammad Yunus in Bangladesh and has since spread throughout the developing world. As in the original model, loans provided in the United States are approved on a group-lending basis, whereby individuals form groups of five individuals to access loans and cannot receive larger loans unless all group members are current on their loans, although they are all individually liable for the funds they receive. Since 2014, MDRC has been working with Grameen America to learn whether and how the program can reduce poverty and increase income for its member borrowers.

MDRC evaluated the Grameen America model using a randomized controlled trial design to analyze the mechanisms that drive the program and to evaluate whether the program translated into improved outcomes for borrowers in Union City, NJ. Three-year findings released in 2022 showed that the Grameen America microlending model resulted in a reduction of material hardship and an increase in credit scores, business ownership, and business earnings. Grameen America members’ average monthly net income was modestly higher than women in the control group. The microlending program also improved participants’ feelings of overall financial well-being.

A second investigation, the Financial Diaries Study, seeks to better understand the financial lives of Grameen America members with the goal of strengthening the services that they are offered. Using the U.S. Financial Diaries methodology, the Grameen Financial Diaries Study is exploring the drivers of material hardship, identifying the mechanisms that account for savings increases, and describing how social networks play into reducing material hardship. MDRC is conducting in-depth interviews and monthly financial diary check-ins with 25 Grameen America members in Los Angeles, Atlanta, New York City, Connecticut, and Newark and Union City, NJ.