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Key Papers


Key Papers on Microfinance Capital Markets

The below is a non-comprehensive list of recommended key papers on microfinance capital markets. For an up to date list of new microfinance publications, please see the MicroCapital Monitor, our regular market report, which provides summaries of new papers and their conclusions.

Otherwise, research in microfinance may be frustrating due to the overwhelming quantity and the underwhelming quality. For non-experts, far and away the best place to start with free information is the Microfinance Gateway, a portal owned by CGAP, a “multilateral” nonprofit microfinance support group housed in the World Bank. However, due to the great depth and breath of this outstanding resource, utility can be cumbersome. To that end, we have produced a user’s guide that will we save you time and gray hair. May your research produce jewels!

Each month, microcapital.org publishes the MicroCapital Monitor in which we review and recommend recent papers in our digest section. The Monitor is available by subscription only. We invite you to download an older sample or contact us to request a copy of the latest issue at no charge!

Recommended Papers on Microfinance Investment

“The Future of the Commercial Microfinance Industry in Asia,” Marguerite S. Robinson, Asian Development Bank, March 2005. This paper describes the current state of and future prospects for the Asian microfinance industry. It also outlines the reasons why the Indonesian microfinance institution Bank Rayat became so successful on a large-scale. The successes and challenges that China, India, and Bangladesh face in building large-scale microfinance institutions are also discussed.


“Benchmarking Latin American Microfinance,” Jared Miller, Microfinance Information eXchange, August 2003.
This paper is recommended to those interested in learning about the Latin American microfinance industry. The region’s performance is examined by comparing it to MFIs from other regions using criteria such as profitability and expense ratios.

“Thirty Global Examples of Commercial Banks and Formal Financial Institutions (FFIs) with Established Microfinance Services,” Jennifer Isern, et al., CGAP, March 2004. This paper is a compilation of some of the largest microfinance institutions, and provides insight as to which countries have the most developed microfinance markets. Included is information about the types of services and number of loans that MFIs have provided. The total number of clients for microbanks ranges from 5,302 clients to 782,586 borrowers and over 9 million depositors.

“Making Sense of Microcredit Interest Rates,” Ruth P. Goodwin-Groen and CGAP staff, CGAP, January 2003. This paper explains the fundamental paradox of microfinance: non-subsidized microfinance institutions charge high interest rates to their borrowers and borrowers are able to repay the loans and high costs of capital. The reasons for this are discussed and clarified.

“The Market for Microfinance Foreign Investment: Opportunities and Challenges,” Gautam Ivatury, CGAP, and Julie Abrams, Consultant, November 2004. This paper provides useful information about the sources of financing for different microfinance institutions in Latin America, in addition to discussing the changing landscape of the industry due to commercialization.

“Microfinance Investment Funds: Key Features,” (pdf) Patrick Goodman, ADA, February 2005.
This paper proposes a parallel between the development of MFIs and the development of microfinance investment funds. It also analyzes some microfinance investment funds, focusing on key players, types of investors, distribution based on their objectives, risk profile, size, the increasing commercialization of the microfinance sector and the main benefits of microfinance investment funds.

“Microfinance Investment Funds Looking Ahead,” (pdf) Ernst A. Bruger and Bikram Duggal, KfW, November 2004. This paper discusses which trends will influence the development of microfinance investment funds (MFIFs), how MFIFs will be able to shape the future of microfinance, and more. The paper is academic in its approach.

“Positioning MFIs for the Capital Markets,” (pdf) Drew Tulchin, Social Enterprise Associates, 2004. This paper identifies specific areas in which the microfinance industry can consider making improvements for better access to investment, including industry language, organizational behavior of microfinance institutions, and deal structure.

“Tapping Financial Markets for Microfinance,” (pdf) Jennifer Meehan, Grameen Foundation, October 2004. This paper was written for a broad audience, including investors, microfinance stakeholders, and managers, to introduce issues necessary to attracting commercial investment. It contains an overview of the microfinance market, lessons learned from pioneering transactions, and recommended practical steps in attracting commercial investment.

“Microfinance: From Village to Wall Street,” (pdf) Tor Jansson, Inter-American Development Bank, November 2001. This paper presents a synopsis of the current state of the industry in Latin America. It provides a rough assessment of the achievement and market penetration of the industry. It offers revealing information on the financial performance of 20 institutions, and it outlines some of the major issues currently facing the industry.

“Foreign Investment in Microfinance: Debt and Equity From Quasi-Commerical Investors,” Gautam Ivatury and Xavier Reille, CGAP, January 2004. This study surveys 36 existing development investors and social investment funds, plus ten new social investment funds, to determine the following characteristics of their investments in microfinance institutions: fund size, geographic focus, proportion of funds committed, financing instruments used, currency of investment, and expected capital increases.

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