Lara (@larryc) on getquin

1Yr·

More loans for people with low incomes? 🏦💰

Dear getquin Community,

I had a fascinating discussion with my friends yesterday about whether banks should be required to lend to low-income people to promote financial inclusion.

Financial inclusion is an important step in the fight against poverty and inequality. Banks play a crucial role in this by providing loans to low-income people. Personally, I find it difficult when banks are required to make such loans, as they can increase the banks' risk of default. Nevertheless, I would like to see banks make more loans to low-income people. A good example of this is Muhammed Yunus and the Grameen Bank, who have shown that it is possible to reduce poverty and improve people's lives through microcredit. In 2006, he was awarded the Nobel Peace Prize for this. There are many benefits of more people having access to credit, such as more economic stability, more business start-ups, and more employment opportunities. I personally believe that banks should take their responsibility and work harder for financial inclusion.

What do you think about this topic? Do you think banks should do more to promote financial inclusion by lending to low-income people? Or should banks even be required to do so?

#finanzielleinklusion
#banken
#kredite
#credit

49 Comments

Hannes@Hannes_SK

1Yr

In general, I do not understand the trend of my young generation to build their lives on debt. Most of them graduate and when they get their first job, they go to the nearest premium car dealership and agree on a uselessly expensive lease or financing. The main thing is to show what you do not have. 🤨 But what purpose should more loans for people with low incomes serve? More useless consumer spending? You don't solve the problem with the loan, but merely postpone it with an installment payment. A loan that I would have really wished for in Germany would be an education loan. So everyone would have the possibility to finance a further education without cutbacks. The economy would have super educated people, the employee would have a higher income and better chances for the future and the state would have higher tax revenues because of it.

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MaK@DollarDon

1Yr

I currently live in Kazakhstan and microcredits are the trend here. You can also pay for almost everything in installments, for example, the bread from the supermarket, if you order it online. (There are even vending machines, where everyone can get a loan and payment within 10 minutes. Conclusion of the story: Everyone is in debt and pays their 17% interest. ( the amount is normal here, because the prime rate is also close to 16%). Have hardly met people here who are not in debt. Poverty is definitely not fought by this. In my opinion, the state should first promote financial education. To your argument with more business creation. It is true that this would give more smart people more opportunities. Unfortunately, 90% of people don't even know the difference between a liability and an asset. Giving money to these people I think is irresponsible and dangerous. ✅

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Staatsmann@Staatsmann

1Yr

We need to differentiate strongly between when the loan is available and the amount. A loan with a high chance of default every year so that people can go on vacation instead of paying off the car? Or a kind of emergency loan for low-income earners so that they can buy a new washing machine?

Even if I don't make myself popular with this: I like the Schufa Score and corresponding mechanisms to give entrepreneurs or banks the possibility to refuse cooperation if the risk is too high (especially for people who don't have their consumption under control and live beyond their means...).

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Gerit@Gerit

1Yr

Spontaneously would occur to me here, in order to bring in also simply a kind "solution beginning", because the opinion of Hannes covers my already well: If one falls by a Credit Rating, because halt not enough income according to bank is present etc. then a specific, individual/changing test introduce, which separates with a certain attitude/knowledge again clearly, thus however again more on poverty coined humans works and a chance offers nevertheless still a credit to get. (That then as additional Rating take up, if these then just punctually repaid have. Trust bonus) Monish Pabrai's foundation helps in India e.g. the poorest children with school/study money, if these come by certain tests. It is of course not optimal, but with a better conclusion, with a good credit (for e.g.. a degree for the children) one can catapult a whole family into the zone of the middle class with the passing of a single child or at least make life easier with "proper" houses, enough food, running water/electricity. Bans & constraints, however, will (almost) never achieve the right effect, especially not with such sensitive issues, where two worlds meet.

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Tine Wittler 🏗@Der_Dividenden_Monteur

1Yr

What amount are we talking about here? Up to let's say 10,000 actually almost everyone gets a loan, provided the Schufa is correct and even that can be ironed out if the score is not high enough, with a good income again.

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Krynt@Krynt

1Yr

We saw how that turned out in 2008. In the credit crunch

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AI@Alpaca-Invest

1Yr

Dear Lara, I find your article very exciting and the topic is open to discussion. For me, the comparison with Muhammed Yunus is very questionable. The system of the Grameen Bank was completely different and also their use. You speak of financial inclusion? What do you mean by that? That we all have the same wealth? That the gap between rich and poor is getting smaller? How people in Germany live in poverty or poor conditions because there is a lack of education and the money that is available for consumption is wasted. In Bangladesh, the concept was used so that people could afford food or drinking water. My generation and those who follow have rather the problem that they have developed an unhealthy attitude to consumption. For me, a very clear no!

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Lorena@Lorena

1Yr

Interesting topic! I think that this only combats symptoms, but not the cause. We should start with financial education, I would worry that otherwise this makes debt even more attractive

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DerBofrostmann@DerBofrostmann

1Yr

I agree with you that microcredit can counteract poverty. But they can. However, the subjunctive of this statement is the fine line between your example and thousands of others. If these credits are used for the foundation or something similar, the added value is certainly positive on average. As soon as they are consumed for this purpose, it is nothing more than aiding and abetting private insolvency (at least for people who are lucky enough to live in a country like Germany, where society then helps to bear the debts of a provatinsolvenz). Otherwise, you can only hope that someone else has built a bridge with his Milkrokredit, which you can use all-purpose. As hard as it sounds now, the whole concept needs financial education to be fruitful. Rarely does this go hand in hand. Rather, people unload money with a wheelbarrow and wonder why this is not enough.

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Fetzen@Fetzen

1Yr

Yunus was originally about microloans to GROUPS so that poor women in rural Bangladesh could buy livestock. The microfinance system has since gotten a bit out of hand. A policy that requires banks to lend to at-risk groups must also consider what those loans are for and how to secure them. This is not a free-for-all Ps: I work on these things, have lived in Bangladesh, and have met Yunus.

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