Journal Name:
- Journal of Industrial Engineering and Management
| Author Name | University of Author |
|---|---|
Abstract (2. Language):
Purpose: The purpose of this document is to review the funding options for Microfinance
Institutions (MFIs), define the size of the holdings of international investors in MFI equity and
in particular the MFIs listed in stock exchanges, analyze the characteristics of these subset of
the financial world and study the stock exchange evolution of some listed MFIs amid the
financial crisis.
Design/methodology/approach: Since academic literature on listed MFI equity is virtually inexistent,
most of the information has been obtained from the World Bank, annual accounts of the listed
MFIs, stock exchanges and from equity research documents.
Findings: Microfinance Institutions share several common characteristics that make them a
resilient business and the few MFIs that are listed in stock exchanges seem to have performed
better in the financial crisis. Microfinance can be considered as one of the new frontiers of the
expansion of the global banking industry.
Practical implications: Presently, international for-profit investors have very few ways of investing
in microfinance equity. Most of the equity of the MFI equity is funded locally or thanks to the
local public sector. The stock exchange listing of the MFIs should drive MFIs towards a more
professional management, more transparency and better governance.
Social implications: Microfinance Institutions provide credit to microenterprises in poor countries
that have no other alternative sources of external capital to expand its activity. If global
investors could easily invest in the listed equity of the MFIs these institutions would expand its
lending books and would improve its governance, part of the population living in poor areas or
with lower income could ameliorate its standard of living.
Originality/value: The number of Microfinance Institutions that are professionally run like
commercial banks is still scarce and even more scarce are the MFI listed in public stock
exchanges. Therefore the published literature on the characteristics and performance of the
listed equity of the Microfinance Institutions is extremely reduced. But microfinance assets are
rapidly growing and MFIs will need to list their equity in stock exchanges to sustain this
expansion.
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