MICROCAPITAL BRIEF: Abhijit Vinayak Banerjee and Esther Duflo of MIT, Dean Karlan of Yale Write New York Times Article Entitled “The Role of Microfinance”

Abhijit Vinayak Banerjee and Esther Duflo of the Massachusetts Institute of Technology (MIT) and Dean Karlan of Yale University of Connecticut have written an editorial for the New York Times entitled “The Role of Microfinance” [1].The authors begin by referring to microfinance as “undoubtedly the most visible innovation in anti-poverty policy in the last half century.” The authors point to the desirability of microlenders in comparison to high interest moneylenders, the lack of corruption of microfinance institutions (MFIs) in comparison to state-run banks that have attempted to deliver credit to the poor, and the profitability of many MFIs. With this, according to the authors, the total number of microfinance borrowers has passed 150 million.
The authors then discuss their recent research involving several MFIs to further explore the potential merits of microfinance. Research on First Macro Bank in the Philippines found increased profits for male-owned (but not female-owned) businesses as a result of microcredit access. For Spandana Sphoorty Innovative Financial Services Limited in India, one in eight borrowers started a business that they would not have otherwise. There is also evidence of Spandana borrowers consuming less in the short-term to save for larger purchases. This is in contrast to the worry that loan “temptation” leads people to spend “irresponsibly.” However, neither study shows an impact on health, education, or women’s empowerment, eighteen months after loan disbursement.

By Christopher Maggio, Research Assistant

About:
Spandana Sphoorty Innovative Financial Services Limited

Description:
Spandana Sphoorty Innovative Financial Services Limited is a microfinance institution (MFI) based in India. It was founded in 1997 as a non-governmental organization (NGO) and is now a non-bank financial company. It offers loans, insurance, and fund transfer services.

Microfinance Information Exchange (MIX) Profile:
http://www.mixmarket.org/mfi/spandana

Organization’s Website:
http://www.spandanaindia.com/

Just the Facts:
– Country of Incorporation: India
– Year Founded: 1997
– Legal Status: Non-Bank Financial Company
– Total Assets: USD 359.5 million (as of 31/March/09)
– Gross Loan Portfolio: USD 245.2 million (as of 31/March/09)
– Number of Active Borrowers: 2.4 million (as of 31/March/09)
– Return on Assets: 6.89%
– Return on Equity: 51.16%
– Area of Operation: India
– Participant(s)/Backer(s)/Investor(s): Lok Capital
– Products: Loans, Insurance, Fund Transfer Services
– Main Funding: Loans, Shareholder Capital
– Managing Director: Padmaja Reddy

Contact Information:

Spandana Sphoorty Financial Limited
Plot No. 79. Vinayak Nagar, Care Crystal, Near Spencer Super Market, Gachibowli, Hyderabad-500032

Ph : +91 40 44386648

E-mail: contact@spandanaindia.com

Additional Resources:
MICROCAPITAL STORY: Spandana Sphoorty Financial Ltd. Issues INR 800 million (USD 17 million) One-year 10 Percent Bonds in Deal Arranged by Standard Chartered Bank: https://www.microcapital.org/microcapital-story-spandana-sphoorty-financial-ltd-issues-inr-800-million-usd-17-million-one-year-10-percent-bonds-in-deal-arranged-by-standard-chartered-bank/

MICROCAPITAL STORY: Hyderbad-based Spandana Microfinance Seeks to Raise Rs 300 Crore (USD 63.7 million) by June: https://www.microcapital.org/microcapital-story-hyderbad-based-spandana-microfinance-seeks-to-raise-rs-300-crore-usd-637-million-by-june/

MicroCapital’s Microfinance Universe profile: Spandana Sphoorty

About:
First Macro Bank

Description:
First Macro Bank is a microfinance institution (MFI) based in the Philippines. It was founded as a rural bank in 1960. It offers loans, voluntary savings, and insurance. It has nine branches and is headquartered in Pateros Metro Manila.

Microfinance Information Exchange (MIX) Profile:
http://www.mixmarket.org/mfi/first-macro-bank

Organization’s Website:
http://www.firstmacrobank.com

Just the Facts:
– Country of Incorporation: The Philippines
– Year Founded: 1960
– Total Assets: USD 13.4 million (as of 31/Dec/08)
– Gross Loan Portfolio: USD 9.4 million (as of 31/Dec/08)
– Number of Active Borrowers: 7,086 (as of 31/Dec/08)
– Return on Assets: 0.65%
– Return on Equity: 6.79%
– Area of Operation: The Philippines
– Participant(s)/Backer(s)/Investor(s): Microenterprise Access to Banking Services (MABS)
– Products and Services: Loans, Voluntary Savings, Insurance
– Main Funding: Loans, Savings, Shareholder Capital
– President: Reggie Ocampo

Contact Information:
Address:
B. Morcilla corner P. Herrera Street, 1620 Pateros, Metro Manila

Email:
busdev@firstmacrobank.com

Phone Numbers:
+63 628 2494
+63 628 2495

Fax:
+63 642 5960

Additional Resources:

MicroCapital’s Microfinance Universe profile: First Macro Bank

Bibliography:
[1] New York Times article entitled ‘The Role of Microfinance”: http://kristof.blogs.nytimes.com/2009/12/28/the-role-of-microfinance/

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