What makes MFIs like the Grameen Bank work? There are many technical issues, but a key feature of their success is that the MFI, like any bank, must convince borrowers that it will exist over the long haul. If borrowers do not believe the MFI will be there tomorrow, they will not worry about repaying their loans today, as the MFI will not be around to penalize them for not repaying. And if borrowers do not repay their loans, the MFI will go broke.
