Investment opportunities in microfinance and their attractiveness for global market players
|Author:||Bc. Barbora Svárovská|
|Year:||2009 - summer|
|Leaders:|| prof. Ing. Karel Janda M.A., Dr., Ph.D.
|Work type:|| Bachelors
|Awards and prizes:||B.A. with distinction from the Dean of the Faculty of Social Sciences for an extraordinarily good bachelors diploma thesis.|
|Abstract:||This thesis treats the topic of microfinance institutions, which are foremost known for providing small size loans to poor or low-income entrepreneurs in developing countries that lack the access to credit and other financial services from formal financial institutions, and it aims to introduce investment options for both institutional or individual investors from developed countries in the sector of microfinance institutions and to analyze the attractiveness of such an investment strategy. After reviewing characteristics of the sector and types of funding sources of microfinance institutions, current trends and the gradual commercialization of the sector are examined. Then we
focus on investment opportunities in microfinance and specialized microfinance investment vehicles. The final part of the thesis has for its aim to analyze risk and return
characteristics of selected European-based microfinance investment funds with respect to global as well as emerging markets stock and fixed income indices in order to find
out whether microfinance assets are correlated with the respective markets. The analysis finds no correlation of returns of microfinance investment funds with those of selected indices and we can therefore argue that microfinance represents a good investment opportunity for a portfolio diversification and its addition to a broader portfolio of assets may help to reduce the overall risk. At the same time, investment in microfinance has the potential to provide an investor with adequate risk-adjusted returns and may be therefore attractive not only for investors with a particular interest in the socially responsible aspect of microfinance.
|Downloadable:|| Bachelor Thesis of Svárovská