From the way you described it, it sounds there weren't any consequences to not paying back. In that case, paying back is a waste of money. Maybe the people overseas paid back because they had been taught to be more obedient to authority than people in Detroit.
Perhaps it's not an issue of "more obedient to authority". Instead, at least some microloans overseas succeed because of "solidarity lending" [1], which involves "peer pressure, mutual support and a healthy culture of repayment".
But not here: "Efforts to replicate solidarity lending in developed countries have generally not succeeded."
I think it could work here among the right groups. E.g. in the last century credit unions were very popular. These weren't just formed by employers and unions, but also by various immigrant groups in the big melting pot cities like New York. Those immigrants weren't desirable customers by existing banks, and so they were forced to form their own banks for both deposits and loans. And were quite successful.
What "qroup" did the borrowers in Detroit belong to?
