Microfinance and Social Investment
AbstractThis review puts a corporate finance lens on microfinance. Microfinance aims to democratize global financial markets through new contracts, organizations, and technology. We explain the roles that government agencies and socially minded investors play in supporting the entry and expansion of private intermediaries in the sector, and we disentangle debates about competing social and commercial firm goals. We frame the analysis with theory that explains why microfinance institutions serving lower-income communities charge high interest rates, face high costs, monitor customers relatively intensively, and have limited ability to lever assets. The analysis blurs traditional dividing lines between nonprofits and for-profits and places focus on the relationship between target market, ownership rights, and access to external capital.
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Bibliographic InfoArticle provided by Annual Reviews in its journal Annual Review of Financial Economics.
Volume (Year): 3 (2011)
Issue (Month): 1 (December)
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Find related papers by JEL classification:
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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- Mark Pauly & Ashley Swanson, 2013. "Social Impact Bonds in Nonprofit Health Care: New Product or New Package?," NBER Working Papers 18991, National Bureau of Economic Research, Inc.
- Bauchet, Jonathan & Morduch, Jonathan, 2013. "Is Micro too Small? Microcredit vs. SME Finance," World Development, Elsevier, Elsevier, vol. 43(C), pages 288-297.
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