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Investment in Microfinance Equity: Risk, Return, and Diversification Benefits

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  • Marie Briere
  • Ariane Szafarz

Abstract

This paper draws a global picture of worldwide microfinance equity. Taking full advantage of daily quoted prices of microfinance stocks from their issuance, we construct microfinance country equity indices and an international global microfinance index. We analyze changes in these indices, assessed in reference to comparable indices for the financial sector and also to national indices. Our findings show that microfinance has been closely correlated with the financial sector since 2003. In terms of risk exposure, estimates of the Capital Asset Pricing Model demonstrate that microfinance shares exhibit higher market beta than those of conventional financial institutions and have equivalent currency exposure.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 11-050.

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Length: 31 p.
Date of creation: Oct 2011
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Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/100398

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Keywords: Microfinance; portfolio management; equity; emerging markets.;

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References

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Cited by:
  1. Moulin, Bertrand, 2011. "Microfinance investment vehicles in Sub-Saharan Africa: constraints and potentials," MPRA Paper 32967, University Library of Munich, Germany.

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