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As microfinance initiatives gain momentum in developing economies, they also find their place in the b-school curriculum. by Sharon Shinn Microfinance T Making a Major Impact with he microfinance revolution began when Bangladeshi economics professor Muhammad Yunus first handed over a few dollars to an impoverished bas- ket weaver in 1974. Since then, the movement toward microfinance—the granting of very small loans to the poorest people in the world to enable them to run small businesses that will lift them out of poverty—has won passionate supporters across the globe. Last year, Yunus and the microfinance insti- tution he founded, Grameen Bank, shared the Nobel Peace Prize. As organizations ranging from the World Bank to privately funded enterprises devote more resources to microfinance initiatives, business schools are responding by offering electives and programs designed to teach students how to function in this specialized area of business. According to Michael Chu, senior lecturer at Harvard Business School in Cambridge, Massachusetts, "Microfinance is a lead- ing example of why business schools have a huge role to play in impacting global poverty. The bulk of global poverty is concentrated in the developing world, which is where the state and the government have many challenges in functioning well. That leaves an enormous space for business." Some schools teach microfinance as a component of social enterprise, a way of doing good through business. Others focus on its commercial applications—the high rate of return on loans, the profit potential inherent in partnering with the poor. No matter what the approach, those in the vanguard see the topic as one that is critical to business, business schools, and the world. Microfinance and the B-School While microfinance can appeal equally to idealists and pragmatists, it's becoming popular in business schools because it works on a very quantifiable level. "Micro- finance isn't just about ideals—it's about wedding vision with concrete financial reality," says Andrea Wuerth, program director for the Martindale Center for the Study of Private Enterprise at Lehigh University in Bethlehem, Pennsylvania. "What has kept us from extending basic financial services to the poor is often a prejudice against them, thinking they don't know how to manage money. Micro- finance has proven that erroneous." But understanding microfinance requires a different kind of knowledge than a student might get through a standard finance curriculum. That's because mi- crofinance is delivered through a bewildering array of models. Major institutions like Citibank, Deutsche Bank, and HSBC have microfinance initiatives, but so do donor-driven enterprises, government offices, and nongovernmental agencies. How they distribute money and how they collect it varies with the organization. "Not only are there different models for providing loans, there are different crite- ria for deciding who can get the money," says Edwin Brands, an adjunct professor in 26 BizEd MAY/JUNE 2007