
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
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.

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.
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