MICROCAPITAL BRIEF: Financial Times’ FundFire Reporter Calls on Big Brokerages to Link Investors and Microfinance Institutions

In a recent column published in The Financial Times, Tom Stabile, a reporter for the The Financial Times publication FundFire, argues that big brokerages, especially American ones, should play a role in linking wealthy investors to microfinance institutions.  Mr Stabile bases his opinion on two disconnected but simultaneously growing populations: “social impact” investors interested in creating both wealth and social good through their investments, and developing world entrepreneurs “hungry” for modern financial tools [1]. Mr Stabile argues that big brokerage firms should play a role in connecting social impact investors to entrepreneurs in the developing world.

Mr Stabile posits that microfinance is a viable option for social impact investors, especially because microfinance institutions (MFIs) currently reach only a small percentage of the potential market. Today’s microfinance market of roughly USD 30 billion is small compared to the supply gap valued ten times that, or USD 300 billion, according to Ms Ashwini Naranayan, the general manager for MicroPlace, a subsidiary of eBay and PayPal that connects retail investors to MFIs through its online investment platform [1].

Mr Stabile points out that United States regulations for large brokerages are the biggest roadblock to establishing a connecting platform between United States brokerages and international MFIs. Ms Narayan recently hired an adviser market liaison officer in order to identify entry points for brokerages and wealth management operations into the microfinance market [1].

By Lindsey Shaughnessy, Research Associate

About The Financial Times: The Financial Times (FT), established in 1888, is an international business news organization. The newspaper is printed at 23 different print sites across the globe, has a daily circulation of 390,203 and a readership of 1.3 million people worldwide. The FT family of companies also includes macro policy intelligence provider Medley Global Advisors (MGA), fund management information provider Money-Media, recruitment site Exec-Appointments and Financial Times Business which produces specialist information on the retail, personal and institutional finance industries, including the personal finance magazine Investors Chronicle, The Banker, Money Management and Financial Adviser for professional advisers.

About MicroPlace: MicroPlace, a subsidiary of eBay and PayPal, was launched in 2006. MicroPlace aims to connect retail investors with microfinance institutions (MFIs) through its online investment platform. Investors can fund four dozen microfinance projects in 35 countries through six intermediaries.

Sources and Additional Resources:

[1] Financial Times, “Big brokerages must work to embrace microfinance”, by Tom Stabile, August 1, 2010. http://www.ft.com/cms/s/0/146391e0-9c02-11df-a7a4-00144feab49a.html

MicroCapital’s Microfinance Universe profile: The Financial Times: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Financial+Times+%28FT%29

MicroCapital’s Microfinance Universe profile: MicroPlace: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MicroPlace

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/.

Similar Posts: