Abstract

http://ssrn.com/abstract=1284472
 
 

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A Survey on Microfinance for Developing Countries: A Social Responsible Investment Opportunity


Roberto Moro Visconti


Università Cattolica del Sacro Cuore - Department of Business Administration

April 10, 2012


Abstract:     
This survey reviews some of the main aspects of microfinance in underdeveloped countries, describing why it has succeeded in reaching the poor, while traditional banks haven't, using innovative devices such as group-lending with self monitoring, short repayments instalments and small loans.

Well known governance problems, such as adverse selection, moral hazard and strategic default are analyzed within the microfinance context, together with synergic products such as microdeposits and insurance.

The high interest rates paradox is another distinctive issue of microfinance and evidence shows that subsidized credit might worsen the situation.

The classic trade-off between maximum outreach to the destitute and financial sustainability is related with a growth evolutionary pattern from subsidized NGOs to commercial banks, together with proposals for improving impact, using also lending sources from socially oriented international funders, who might even look for a reasonable risk-return profile.

Innovative questions and proposals are illustrated, so as to give an updated and synthetic picture of the state of the art, which might prove useful for researchers and practitioners.

Number of Pages in PDF File: 56

Keywords: Microfinance, poverty alleviation, lending innovations and governance, outreach and sustainability

JEL Classification: G21, H81, I30, L31, O19

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Date posted: October 14, 2008 ; Last revised: October 26, 2014

Suggested Citation

Moro Visconti, Roberto, A Survey on Microfinance for Developing Countries: A Social Responsible Investment Opportunity (April 10, 2012). Available at SSRN: http://ssrn.com/abstract=1284472 or http://dx.doi.org/10.2139/ssrn.1284472

Contact Information

Roberto Moro Visconti (Contact Author)
Università Cattolica del Sacro Cuore - Department of Business Administration ( email )
Largo Agostino Gemelli 1
Milano, 20123
Italy
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