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Performance of the Microfinance Investment Vehicles

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  • Erwan Le Saout

Abstract

Over the last few years, the microfinance sector has seen its transformation. Microfinance institutions seek a wide range of sources of funding, while private investors seek not only social returns but also financial returns. This new approach has led to the emergence of microfinance investment funds and initial public offerings of certain Microfinance institutions. Microfinance now seems to be seen as a new investment opportunity by global investors. Aim of this paper is to study the performance of public Microfinance Investment Vehicles. Despite a significant currency risk, we find that the integration of microfinance assets diversifies the investor¡¯s risks and improves the efficient frontier. We conclude that microfinance institutions, via investment vehicles, are likely to attract capital from socially responsible investors seeking new investment opportunities despite a sharp decline in the Sharpe ratio over the past few months.

Suggested Citation

  • Erwan Le Saout, 2017. "Performance of the Microfinance Investment Vehicles," Applied Economics and Finance, Redfame publishing, vol. 4(6), pages 42-52, November.
  • Handle: RePEc:rfa:aefjnl:v:4:y:2017:i:6:p:42-52
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    References listed on IDEAS

    as
    1. Brière, Marie & Szafarz, Ariane, 2015. "Does Commercial Microfinance Belong to the Financial Sector? Lessons from the Stock Market," World Development, Elsevier, vol. 67(C), pages 110-125.
    2. Morduch, Jonathan, 2000. "The Microfinance Schism," World Development, Elsevier, vol. 28(4), pages 617-629, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    financial markets; microfinance investment vehicle; performance; spanning tests;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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