The market inefficiency that is being exploited by Grameen Bank. Concept Introduction: Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower. Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 25, Problem 1BCQ

To determine

The market inefficiency that is being exploited by Grameen Bank.

Concept Introduction:

Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower.

Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Expert Solution & Answer

Explanation of Solution

Inefficiency exploited by Grameen Bank:

There is much inefficiency that Grameen Bank has exploited. Some of them are:

It ensures that the loans taken by the group member are repaid without any legal obligations and credit history of the person.
It also takes financial responsibility of the person who borrows from such a bank and gets into some difficult situation.
If all the members repay the loan at the right time, then they are offered a large amount of loan.
It provides loans not on the basis of current price but the amount of the repaid loan by its member.

Source of inefficiency:

The major source of inefficiency in such a market is the lack of communication between borrowers and lenders.
It is because the needs of borrowers are not fulfilled by the bank due to borrowing constraints like collateral assets and credit history.

Conclusion:

Thus, communication between borrowers and lenders is very important in loanable funds market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Government Purchases and Tax Revenues A B GDP T₂ Refer to the diagram. Discretionary fiscal policy designed to slow the economy is illustrated by Multiple Choice the shift of curve T₁ to T2. a movement from d to balong curve T₁.

Section III: Empirical Findings: Descriptive Statistics and inferential statistics………………..40% Descriptive statistics provide details about the Y variable, based on the sample for the 10-year period. Here, you use Excell or manually compute Mean or the average income per capita. Interpret the meaning of average income per capita. Draw the line chart showing the educational performance over the time-period of your study. Label the Vertical axis as Y performance and X axis as the explanatory variable (X1) . Do the same thing between Y and X2 Empirical/ Inferential Statistics: Here, use the sample information to perform the following: Draw the Scatter plot and impose the trend line: showing the Y variable and explanatory variables ( X1). Draw the scatter plot and impose the tend line: Showing Y and X2. Does your evidence (data) support your theory? Refer to the trend line: Is the relationship positive or negative as expected? Based on the data sheet below: Years Y ( per…

Section III: Empirical Findings: Descriptive Statistics and inferential statistics………………..40% Descriptive statistics provide details about the Y variable, based on the sample for the 10-year period. Here, you use Excell or manually compute Mean or the average income per capita. Interpret the meaning of average income per capita. Draw the line chart showing the educational performance over the time-period of your study. Label the Vertical axis as Y performance and X axis as the explanatory variable (X1) . Do the same thing between Y and X2 Empirical/ Inferential Statistics: Here, use the sample information to perform the following: Draw the Scatter plot and impose the trend line: showing the Y variable and explanatory variables ( X1). Draw the scatter plot and impose the tend line: Showing Y and X2. Does your evidence (data) support your theory? Refer to the trend line: Is the relationship positive or negative as expected? Create graphs based on table below; Years Y ( per…

Answer 2

Question

Chapter 25, Problem 1BCQ

To determine

The market inefficiency that is being exploited by Grameen Bank.

Concept Introduction:

Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower.

Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Expert Solution & Answer

Explanation of Solution

Inefficiency exploited by Grameen Bank:

There is much inefficiency that Grameen Bank has exploited. Some of them are:

It ensures that the loans taken by the group member are repaid without any legal obligations and credit history of the person.
It also takes financial responsibility of the person who borrows from such a bank and gets into some difficult situation.
If all the members repay the loan at the right time, then they are offered a large amount of loan.
It provides loans not on the basis of current price but the amount of the repaid loan by its member.

Source of inefficiency:

The major source of inefficiency in such a market is the lack of communication between borrowers and lenders.
It is because the needs of borrowers are not fulfilled by the bank due to borrowing constraints like collateral assets and credit history.

Conclusion:

Thus, communication between borrowers and lenders is very important in loanable funds market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 25, Problem 1BCQ

To determine

The market inefficiency that is being exploited by Grameen Bank.

Concept Introduction:

Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower.

Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Expert Solution & Answer

Explanation of Solution

Inefficiency exploited by Grameen Bank:

There is much inefficiency that Grameen Bank has exploited. Some of them are:

It ensures that the loans taken by the group member are repaid without any legal obligations and credit history of the person.
It also takes financial responsibility of the person who borrows from such a bank and gets into some difficult situation.
If all the members repay the loan at the right time, then they are offered a large amount of loan.
It provides loans not on the basis of current price but the amount of the repaid loan by its member.

Source of inefficiency:

The major source of inefficiency in such a market is the lack of communication between borrowers and lenders.
It is because the needs of borrowers are not fulfilled by the bank due to borrowing constraints like collateral assets and credit history.

Conclusion:

Thus, communication between borrowers and lenders is very important in loanable funds market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 25, Problem 1BCQ

To determine

The market inefficiency that is being exploited by Grameen Bank.

Concept Introduction:

Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower.

Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Expert Solution & Answer

Explanation of Solution

Inefficiency exploited by Grameen Bank:

There is much inefficiency that Grameen Bank has exploited. Some of them are:

It ensures that the loans taken by the group member are repaid without any legal obligations and credit history of the person.
It also takes financial responsibility of the person who borrows from such a bank and gets into some difficult situation.
If all the members repay the loan at the right time, then they are offered a large amount of loan.
It provides loans not on the basis of current price but the amount of the repaid loan by its member.

Source of inefficiency:

The major source of inefficiency in such a market is the lack of communication between borrowers and lenders.
It is because the needs of borrowers are not fulfilled by the bank due to borrowing constraints like collateral assets and credit history.

Conclusion:

Thus, communication between borrowers and lenders is very important in loanable funds market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 25, Problem 1BCQ

To determine

The market inefficiency that is being exploited by Grameen Bank.

Concept Introduction:

Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower.

Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Expert Solution & Answer

Explanation of Solution

Inefficiency exploited by Grameen Bank:

There is much inefficiency that Grameen Bank has exploited. Some of them are:

It ensures that the loans taken by the group member are repaid without any legal obligations and credit history of the person.
It also takes financial responsibility of the person who borrows from such a bank and gets into some difficult situation.
If all the members repay the loan at the right time, then they are offered a large amount of loan.
It provides loans not on the basis of current price but the amount of the repaid loan by its member.

Source of inefficiency:

The major source of inefficiency in such a market is the lack of communication between borrowers and lenders.
It is because the needs of borrowers are not fulfilled by the bank due to borrowing constraints like collateral assets and credit history.

Conclusion:

Thus, communication between borrowers and lenders is very important in loanable funds market.

Answer 6

Chapter 25, Problem 1BCQ

To determine

The market inefficiency that is being exploited by Grameen Bank.

Concept Introduction:

Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower.

Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Expert Solution & Answer

Explanation of Solution

Inefficiency exploited by Grameen Bank:

There is much inefficiency that Grameen Bank has exploited. Some of them are:

It ensures that the loans taken by the group member are repaid without any legal obligations and credit history of the person.
It also takes financial responsibility of the person who borrows from such a bank and gets into some difficult situation.
If all the members repay the loan at the right time, then they are offered a large amount of loan.
It provides loans not on the basis of current price but the amount of the repaid loan by its member.

Source of inefficiency:

The major source of inefficiency in such a market is the lack of communication between borrowers and lenders.
It is because the needs of borrowers are not fulfilled by the bank due to borrowing constraints like collateral assets and credit history.

Conclusion:

Thus, communication between borrowers and lenders is very important in loanable funds market.

Answer 7

Chapter 25, Problem 1BCQ

To determine

The market inefficiency that is being exploited by Grameen Bank.

Concept Introduction:

Market Inefficiency: It is a situation in which there is a lack of information either to the buyer or to the seller. In case of loanable fund market, inefficiency generally means that the market price is not indicating the demand and supply information correctly. The borrower has a limit in taking loans from the bank because the bank has certain criteria for providing loans. On the other hand, banks lack information about the credibility of borrower.

Grameen Bank: It is a bank setup with the main function to provide loans to the poor people without any legal obligation and collateral security. It also takes responsibility of a borrower if one gets into any difficulty.

Answer 8

Expert Solution & Answer

Explanation of Solution

Inefficiency exploited by Grameen Bank:

There is much inefficiency that Grameen Bank has exploited. Some of them are:

It ensures that the loans taken by the group member are repaid without any legal obligations and credit history of the person.
It also takes financial responsibility of the person who borrows from such a bank and gets into some difficult situation.
If all the members repay the loan at the right time, then they are offered a large amount of loan.
It provides loans not on the basis of current price but the amount of the repaid loan by its member.

Source of inefficiency:

The major source of inefficiency in such a market is the lack of communication between borrowers and lenders.
It is because the needs of borrowers are not fulfilled by the bank due to borrowing constraints like collateral assets and credit history.

Conclusion:

Thus, communication between borrowers and lenders is very important in loanable funds market.