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

42 Pages Posted: 7 Mar 2011 Last revised: 15 Jan 2013

Marie Briere

Amundi Asset Management; Paris Dauphine University; Université Libre de Bruxelles

Ariane Szafarz

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi

Date Written: January 5, 2013

Abstract

This paper is the first to draw a global picture of worldwide microfinance equity by taking full advantage of daily quoted prices. We revisit previous findings showing that investors should consider microfinance as a self-standing sector. Our results are threefold: 1) Microfinance has become less risky and more closely correlated with the financial sector, 2) Microfinance shares exhibit higher market betas than those of conventional financial institutions, and have equivalent currency exposure, and 3) Introducing a self-standing microfinance sector presents few diversification benefits. This paper confirms that microfinance has changed dramatically during the last decade.

Keywords: Microfinance, Portfolio Management, Equity, Emerging Markets

JEL Classification: G11, G15, O16, C58, G21

Suggested Citation

Briere, Marie and Szafarz, Ariane, Investment in Microfinance Equity: Risk, Return, and Diversification Benefits (January 5, 2013). Available at SSRN: https://ssrn.com/abstract=1776451 or http://dx.doi.org/10.2139/ssrn.1776451

Marie Briere

Amundi Asset Management ( email )

90 Boulevard Pasteur
Paris, 75015
France

Paris Dauphine University ( email )

place du Maréchal de Lattre de Tassigny
Paris, 75016
France

Université Libre de Bruxelles ( email )

Brussels
Belgium

Ariane Szafarz (Contact Author)

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) & CERMi ( email )

50 Avenue Roosevelt
Brussels 1050
Belgium

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