Innovations In Microfinance Funding-Books Pdf

Innovations in Microfinance Funding
03 Dec 2019 | 53 views | 0 downloads | 5 Pages | 532.82 KB

Share Pdf : Innovations In Microfinance Funding

Download and Preview : Innovations In Microfinance Funding

Report CopyRight/DMCA Form For : Innovations In Microfinance Funding



Transcription

LITERATURE SURVEY, The role of microfinance in economic development has been documented from a macroeconomic. perspective Imai et al 2010 used cross country and panel data and found that when countries have. more microfinance loans they also tend to have lower poverty measures From the economic standpoint. and from the investor standpoint it is vital to understand the channels through which microfinance. institutions henceforth referred to as MFIs are able to influence economic activity Maksudova 2010. has discussed several channels through which microfinance organizations can impact economic growth. Underlying these channels is the relationship between financial sector development and economic growth. which is a well known body of literature One of the channels is the impact of microfinance on production. and entrepreneurship and the reduction of poverty and income inequality A second channel is through. the formalization of shadow financial markets or the implementation of missing financial markets A third. channel of impact lies in the interaction between MFIs and commercial banks Findings show that there is. bicausality in these channels Ahlin 2011 carried out a study of MFIs and included country specific. economic and institutional data the results showed that MFIs can meet their costs better when there is. strong economic growth and when the country s financial system is better developed. MFIs have proven themselves as viable institutions with low default rates From an investor. standpoint an important question that arises with any new financial instrument is the risk involved in that. instrument One way to assess the risk of an instrument is to assess its role in a portfolio of assets A well. balanced portfolio has assets that have a spread of risk such that not all asset values are moving in the. same direction Using data from 1998 to 2006 Krauss and Walter 2009 have shown that MFI asset. values generally do not have high correlations with the asset values of domestic and international assets. typically available to commercial investors Gonzalez 2007 found that there was no significant. relationship between MFI returns and economic growth This indicates that MFI returns can move. independently of macroeconomic changes and can thus be a useful portfolio asset during economic. downturns Oehri and Fausch 2008 carried out a study on the impact of microfinance investment funds. on standard portfolios consisting of four assets stocks bonds hedge and money market funds They. found that the microfinance investment funds showed stability in terms of volatility and did now show a. strong correlation with the other assets This indicates that microfinance funds are a very good way to. diversify typical portfolios In addition investors also benefit from gaining additional social returns. Dorfleitner et al 2010 Overall it has been shown that well leveraged MFIs tend to improve their. performance by enjoying economies of scale and widening their target markets and therefore enjoying. greater efficiency Kyereboah Coleman 2007, In terms of the progression of microfinance organizations moving to external funding there is a. normal progression from donations and grants to loans from commercial banks Thereafter if the. financial system is well developed the MFIs can seek funding from the capital markets For example. MFIs can opt for microfinance funds which offer investors a variety of instruments including debt. instruments The use of debt instruments can range from local small bonds to international bonds Reddy. and Rhyne 2006 Local bonds can be issued in domestic currency and these kinds of local bonds can be. seen as attractive to investors who are seeking to diversify their portfolios domestically As the. microfinance organizations become larger and increase their scale they can issue international. microfinance bonds This stage involves exposure to exchange rate risk as the bonds are priced in one of. the international trade currencies MFIs that seek international funding find themselves exposed to one or. more risks these risks include interest rate risks country risks and exchange rate risks Holden and. Holden 2004 Exchange rate risk is particularly acute when exchange rates are volatile between the two. countries These MFIs must then consider appropriate hedging instruments. Recent examples include the Dignity Fund from California and Global Partnerships Microfinance. Funds from Seattle There are also a few equity funds and some mixed funds such as MicroVest I Wall. Street Journal 2006 Annual returns for investors may range anywhere from 1 to 5 for microfinance. bond funds and may range anywhere from 5 to 10 for microfinance equity funds Wall Street. Journal 2006 These kinds of advanced capital market instruments are not the norm in the developing. Journal of Applied Business and Economics Vol 18 5 2016 107. countries and so beyond commercial banks there is a need to develop adequate microfinance bond. markets In all area of the world in order for microfinance bonds to succeed domestically and. internationally these organizations must be able to offer competitive terms and there must be investors. who are interested in the central mission behind these organizations. LINKS BETWEEN MICROFINANCE AND CAPITAL MARKETS, In what ways is microfinance linked with capital markets in the world today Reddy and Rhyne. 2006 have identified three main ways through the use of local microfinance bonds the use of. international microfinance bonds and through the use of equity funds ACCION Investments is an. example of the use of equity funds in microfinance. BlueOrchard issued a collateralized debt obligation CDO in the amount of 108 million in 2007. Reuters 2007 This CDO combined the loans made to more than twenty MFIs who had in turn issued. loans to more than 70 000 people All the MFIs were in thirteen different emerging markets and the result. was excess demand by investors for the CDO This result indicated that investors are ready and willing to. subscribe to microfinance backed bonds as they consider the returns and investment grades of these. bonds to be above those of other instruments based on emerging market assets. Mexico s Banco Compartamos the largest MFI in Mexico had a very large IPO organized by Credit. Suisse Davis and Dubitsky 2008 Earlier in 2002 the same MFI had issued 68 million microfinance. bond Krauss and Walter 2009 Richard Rosenberg of CGAP 2007 discusses how the Banco. Compartamos 2007 IPO was hugely oversubscribed and in fact excess demand caused the share price to. rise more than 20 on the initial trading day, In 2006 RSA Capital and CitiGroup among others securitized Bangladesh s BRAC Bank s. microcredit loans with an AAA rating Citigroup 2006 This allowed BRAC to expand its loan offerings. significantly, INNOVATION IN MICROFINANCE BOND INSTRUMENTS.
There are several key advantages to holding microfinance bonds The investor who is interested in. social impact social investors find these instruments attractive Credit Suisse undertook a study of the. effects of the 2007 2009 financial crisis on the microfinance sector and found that microfinance bonds. could be a good method of portfolio diversification because of the low or negative correlation with other. types of assets Struber 2011 The study did find however that the SMX microfinance index was. correlated with short term interest rates the explanation lies in the short term nature of microfinance. instruments During recessionary periods MFIs may find that their key sponsors or donors are not as. able to fund their operations The slowdown in incoming funds would affect the number of loans issued. by MFIs Microfinance backed bonds not only allow for investors to find a way to diversify their. portfolios but can also widen the flow of funds to MFIs during economic downturns Overall the 2007. 2009 financial crisis had the effect of causing microfinance institutions to focus on moving away from. donation based funding and local banking sector funding to more market based sources of funding. In May of 2016 the European Investment fund under the umbrella of the European Union Program. for Employment and Social Innovation reached a landmark agreement with a Greek bank Karditsa. Bank to support Greek micro borrowers who are mostly involved in farming or green micro enterprises. or are unemployed borrowers who want to start businesses Given Greece s continued government budget. problems economic woes and even discussions on a possible exit from the European Union a large. missing market may be satisfied by the existence of more MFIs in Greece Based on findings in the. literature regarding the low correlation between MFI returns and income per capita data MFI backed. bonds would seem to be a good way to spread risk during economic downturns such as the one in Greece. The question then arises as to how microfinance bonds should develop to attract a greater number of. investors There are innovative bonds such as inflation indexed bonds and GDP indexed bonds and social. impact bonds SIBs Typical social impact bonds work in the following way A contract is written. 108 Journal of Applied Business and Economics Vol 18 5 2016. between the lender organization and the borrower organization The contract stipulates that repayment. occurs only when certain development targets or social targets are reached Development impact bonds. are a more recent innovation whereby financial organizations that are involved in development initiatives. are able to use a version of the social impact bond Rockefeller Foundation 2014. Thus these kinds of development impact bonds can be used to create impact in the areas of poverty. reduction disease prevention and control educational projects etc A lucrative area of innovation in. microfinance bonds may lie in the adaptation of some characteristics of social impact bonds In other. words a new type of microfinance bond called a microfinance impact bond MIB could develop. whereby a pay for impact model is introduced The idea is that the microfinance institution can link its. objectives and projected goals with the bond instrument being issued For example if a microfinance. institution has a goal to reduce poverty by half in a particular area through the use of microfinance loans. which the target market could use to start up small businesses these loans could be funded through an. innovative use of MIBs If microfinance institutions are able to engineer the use of the impact bond. methodology this would be a very useful and timely innovation for the microfinance industry. The way forward for microfinance is to increase the potential for sustainability Therefore MFIs. should extend the degree to which they tap the financial markets In order to achieve economies of scale. efficiency and greater impact on a larger target market MFIs need to issue more financial instruments. Furthermore the increased use of MFIs will allow for poverty reduction and economic development even. when monetary and fiscal authorities are not able to engage in active macroeconomic policies in. recessionary economies Garnering investor interest will happen through innovation in the debt. instruments offered by MFIs, CONCLUSION, The future of microfinance lies in sustainability Since microfinance organizations do not typically. issue large loan amounts and since interest payments are used to fund administrative expenses and new. loans it is imperative that these organizations engage in wide scale use of funding sources that tap into. the market Moreover for microfinance to have a large spread of impact and become widely used as a. development tool and a poverty alleviation option it is imperative that these organizations have a. continuous flow of funds Microfinance institutions have proven their success in different aspects of. welfare improvement and economic development and so there is no doubt that these organizations play a. role in improving the economic status of loan recipients and by extension their families especially their. children Microfinance backed bonds have proven their feasibility in the market. It is now time to weld these two concepts together in a large scale way to increase the presence of. microfinance institutions in the financial markets around the world The key lies in the innovation of. microfinance backed instruments through the use of new microfinance impact bonds Policymakers. should focus on making the transition to the markets easier for microfinance institutions and financial. organizations such as large multinational banks and investment banks should expand their portfolios to. include assets based on microfinance loans In this way the impact that these institutions have on poverty. alleviation and economic welfare can be amplified, REFERENCES. A New Way to Do Well By Doing Good The Wall Street Journal January 5 2006. Ahlin C et al 2011 Where Does Microfinance Flourish Microfinance Institution Performance in. Macroeconomic Context Journal of Development Economics Vol 95 No 2 pp 105 120. Bangladesh Citigroup Supports World s First AAA Rated Microcredit Securitization Citigroup July. 2006 http www citigroup com citi news 2006 060706b htm. Davis S R Dubitsky 2008 Microfinance Meets Wall Street Forbes Magazine March 26. Dorfleitner G Leidl M J Reeder 2010 Theory of Social Returns in Portfolio Choice with. Application to Microfinance Working Paper, Journal of Applied Business and Economics Vol 18 5 2016 109. Innovations in Microfinance Funding Lillian Kamal University of Hartford Microfinance institutions MFIs have been making microfinance loans for several decades now and their impact on poverty alleviation and living standards for women has been well documented A challenge for MFIs lies in securing adequate and sustainable funding A

Related Books

Introduction to Philosophy Stephen Hicks

Introduction to Philosophy Stephen Hicks

Introduction to Philosophy Dr Stephen Hicks Department of Philosophy Center for Ethics and Entrepreneurship Rockford College Rockford Illinois 3 Readings in Philosophy Stephen Hicks Ph D Contents Bertrand Russell The Value of Philosophy 4 Ayn Rand Philosophy Who Needs It 9 Galileo Galilei Letter to the Grand Duchess Christina 18 John Locke A Letter Concerning

INTRODUCTION TO PHILOSOPHY rosminipublications com

INTRODUCTION TO PHILOSOPHY rosminipublications com

2 Introduction to Philosophy ABOUT THE AU THOR S STUDIES It is hard to give new life to what is old au thor ity to what is new splen dour to what has fallen out of use light to what is ob scure grace to what is wea ri some trust to what is doubt ful Pliny Nat u ral His tory Pref ace ABOUT THE AU THOR S STUDIES To his friends and to all who wish him well 1 The pub lic and

PROGRAMMA SVOLTO IIS Salustio Bandini Siena

PROGRAMMA SVOLTO IIS Salustio Bandini Siena

caratteristiche dei materiali sollecitazioni semplici e composte u d 1 modulo di young u d 2 legge di hooke principio di sovrapposizione degli effetti principio di de saint venant u d 3 sforzo normale semplice u d 4 deformazioni dovute ai carichi coeficciente di poisson u d 5 taglio semplice u d 6 flessione semplice u d 7 sforzo normale e flessione retta modulo 9 le tipologie residenziali u

Lenovo IdeaPad U310 410 static highspeedbackbone net

Lenovo IdeaPad U310 410 static highspeedbackbone net

Lenovo IdeaPad U310 U410 Hardware Maintenance Manual 2 Follow these rules below to ensure general safety Observe a good housekeeping in the area where the machines are put during and after the maintenance When lifting any heavy object 1 Make sure that you can stand safely without slipping 2 Distribute the weight of the object

BMW X4 PRICE LIST

BMW X4 PRICE LIST

BMW X4 PRICE LIST APRIL 2018 CO 2 Tax including 15 VAT X4 xDrive20i X4 xDrive20d X4 xDrive28i X4 xDrive30d X4 xDrive35i 8 speed Automatic Transmission Steptronic 5 186 50 1 138 50 8 speed Sport Automatic Transmission Steptronic 5 313 00 3 668 50 9 234 50 Recommended retail price including 15 VAT but excludes CO 2

Cequent Installation Instructions towing tip or visit www

Cequent Installation Instructions towing tip or visit www

Technical Assistance 800 632 3290 TechnicalSupport cequentgroup com Installation Instructions PART NUMBERS 24949 77949 CQT24949 2016 Cequent Performance Products Inc Printed in Mexico Sheet 1of 18 24949NP 8 12 16 Rev A To prevent SERIOUS INJURY DEATH or PROPERTY DAMAGE ALWAYS read understand and follow warnings and instructions for your hitch BEFORE installation Keep for

Guide for Writing Technical Reports Stellenbosch University

Guide for Writing Technical Reports Stellenbosch University

The majority of engineering tasks include the writing of technical reports even if the main objective is much more extensive Since technical reports and papers are used to summarise information in a way that is easily accessible they should be as concise accurate and complete as possible and be aimed at a specific group of readers

SSP375 audi q7 new driver assistance systems

SSP375 audi q7 new driver assistance systems

New driver assistance systems that have been in troduced into series production for the first time on board the Audi Q7 make a considerable contribution in this regard On request a number of innovative driver assistance systems are also available in the Q7 for example the radar based Audi side assist the optical parking system with audible and visual information and the reversing camera A

The Tiguan Volkswagen

The Tiguan Volkswagen

THE TIGUAN ALLOY WHEELS SAFETY OPTIONAL EQUIPMENT BLUEMOTION TECHNOLOGY TRIM LEVELS CONTENTS 08 EXTERIOR INTERIOR ENGINES CHASSIS AND GEARBOXES 12 18 26 28 30 31 32 42 Combinations 46 Technical 40 specification 36 Acoustics 38 Paint Upholstery 48 Technology 50 Volkswagen service Front cover models shown are Tiguan Match Edition with optional Bi xenon headlights and metallic paint and Tiguan

Objective C Language and GNUstep Base Library Programming

Objective C Language and GNUstep Base Library Programming

C 5 Developer s Workbench 108 C 6 Longevity 108 The manual does not cover installation instructions as these vary from system to system and are documented fairly well in the GNUstep HOWTO The target audience for this manual is the C C or Java programmer that wishes to learn to use Objective C effectively We assume that while the reader is able to understand English it

Generating an APNs Certificate for MDM AirWatch

Generating an APNs Certificate for MDM AirWatch

Generating an APNs Certificate from a Mac 3 Create a Certificate Signing Request 3 Upload the CSR to the AirWatch Certificate Portal 5 Upload the Intermediate Certificate to the Apple Push Certificate Portal 6 Completing the CSR and Exporting the APNs Certificate 9 Generating an APNs Certificate from a Windows Server 11 Create a Certificate Signing Request