MICROCAPITAL BRIEF: Microfinance Bank Compartamos Banco, Researchers Dean Karlan of Yale University and Jonathan Zinman of Dartmouth University to Study How Customers Use Microfinance Products

Compartamos Banco, a microfinance bank based in Mexico, and researchers Dean Karlan of Yale University and Jonathan Zinman of Dartmouth University have announced that they will conduct a four-year study to determine how microfinance bank customers use financial products and to quantify the impact these products have on customers’ lives.

Microfinance has its roots in lending, but Daryl Collins, an author of several microfinance books, argues that loans may not be the most important financial product to bank customers. He argues that the poor require more flexible financial tools since their income is not only low, it is also unpredictable and varied [1].

Speaking about the new study at the recent Microfinance Impact & Innovation Conference in New York Carlos Danel, a co-founder of Compartamos Banco, summarizes the argument for more research: “We’re an industry built on assumptions, and we’ve gotten to a point where we have to test those. Research is showing us that we actually don’t know a lot about the customers we serve [2].”

By John Howard-Smith, Research Associate

About Compartamos Banco: Compartamos Banco is a microfinance bank based in Mexico that was founded in 1990. It offers both group and individual loans in rural and urban areas. Compartamos Banco provides small loans to low-income Mexican individuals and business owners, voluntary savings, insurance and loans specifically for home improvement. The company made its initial public offering (IPO) in 2007 on the New York and Mexican stock exchanges in a transaction worth USD 467 million. As of 2009, Compartamos Banco had total assets equivalent to USD 708 million, a gross loan portfolio of USD 577 million and 1.5 million borrowers. For the quarter ending June 30, 2010 the MFI had a return on assets (ROA) of 19.65 percent and return on equity (ROE) of 42.17 percent.

[1] CGAP: “Does Microcredit Really Help Poor People? How? And how do we know?”, http://microfinance.cgap.org/2009/10/05/does-microcredit-really-help-poor-people-how-and-how-do-we-know/

[2] Reuters: “The Real Revolution in Microfinance”, http://blogs.reuters.com/barbarakiviat/2010/10/22/the-real-revolution-in-microfinance/

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

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