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

  • Marie Briere
  • Ariane Szafarz

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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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
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/100398
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  1. Gonzalez, Adrian, 2007. "Resilience of Microfinance Institutions to National Macroeconomic Events: An Econometric Analysis of MFI asset quality," MPRA Paper 4317, University Library of Munich, Germany.
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  7. Mersland, Roy, 2007. "The cost of ownership in microfinance organization," MPRA Paper 2061, University Library of Munich, Germany.
  8. Brière, Marie & Burgues, Alexandre & Signori, Ombretta, 2010. "Volatility Exposure for Strategic Asset Allocation," Economics Papers from University Paris Dauphine 123456789/7739, Paris Dauphine University.
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  23. Patten, Richard H. & Rosengard, Jay k. & Johnston, Don JR., 2001. "Microfinance Success Amidst Macroeconomic Failure: The Experience of Bank Rakyat Indonesia During the East Asian Crisis," World Development, Elsevier, vol. 29(6), pages 1057-1069, June.
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