Lenders providing relatively small loans have helped more than 59 million of the world’s poorest people improve their communities. 1 This unusual combination of philanthropy and investing remedies economic disparities in underserved areas and as a new branch of socially responsible investing, it can generate competitive returns. Microfinancing is more than an investing buzzword. With more than $33 billion in total assets, 2 microfinance institutions (MFI) have become a potent force worldwide. MFIs are also creating an emerging asset class of microfinance investment vehicles such as certificates of deposit from community development banks, equity and debt funds, or loans to MFIs. To be sure, microfinance has been around since the Marshall Plan, but it received renewed attention in the mid-1970s through the innovative microcredit projects of 2006 Nobel Peace Prize winner Muhammad Yunus in Bangladesh. In its entirety, microfinance encompasses the full range of banking services for the p...
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