So Akhbar, a peasant farmer in, say, Bengladesh, walks into his little village’s local micro-credit bank, looking for a loan for (the equivalent of) 100 bucks or so to open up a little business. “Do you have collateral?” the Banker asks. “What’s collateral?” Akhbar replies. So the Banker gives him a little lesson on banks and banking and how loans work and all that. “So, do you own any property?,” the Banker asks. “No,” Akhbar replies. “Any tools?” “No.” “Equipment?” “No.” “Do you have any cows?” “Yes – I have some cows.” “How many cows do you have?” “About 100.”
So the bank’s happy and gives Akhbar his $100.
A year later, Akhbar comes back to the bank with some money in his hand. He peels off a few bills to pay back the $100, and a few more to pay the interest – and he still has some money in his hand. So the Banker gives him another little finance lesson, explaining to Akhbar that if leaves the money with the bank, it will grow. And Akhbar asks: “How many cows do you have?”
[thanks to Eleanor Sebastian]