Bennett Pope, Chapter 7, question 5

My dad works for World Vision, and Wheelan's mention of microfinance reminded me of World Visions microfinance programs. Vision Fund is essentially a bank that World Vision owns that gives loans as a lump sum to a group of 12-18 people. These groups of people receive a loan that they all get a part of. The members of the group agree to cross garuntee loans, meaning that if one person in the group is unable to repay their part of the loan, then the other members of the group will pay it for them. This makes the loan safer to lend, and it puts positive pressure on the members to repay the loans so the others don't have to bail them out. The groups meet every other week to discuss what is working well, what isn't working so well, and what they can do better. Loans are typically repaid with interest in about 10 months, and the group is then able to apply for another, possibly larger, loan. Once Vision Fund receives the loan back, they are able to send the money back into the system, giving out even more loans than before. People in third-world countries are able to do incredible things with the money they get from these loans and they can repay their loans very consistently. For more information, you can go to visionfund.org