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http://hdl.handle.net/2451/27406
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| Title: | Can Microfinance Reduce Portfolio Volatility? |
| Authors: | Kraussa, Nicolas
Walter, Ingo |
| Keywords: | microfinance
poverty alleviation
systemic risk |
| Issue Date: | 18-Feb-2008 |
| Series/Report no.: | FIN-07-054 |
| Abstract: | Microfinance is arguably one of the most effective techniques for
poverty alleviation in developing countries. Although traditionally
supported by nongovernmental organizations and socially-oriented
investors, microfinance institutions (MFIs) have increasingly
demonstrated their value on a stand-alone basis, typically exhibiting
low default rates combined with attractive returns and growth,
encouraging greater commercial involvement. This paper addresses a
related issue whether microfinance shows low correlation with
international and domestic market performance measures. If so, it could
form the empirical basis for MFI access to capital markets and
performance-driven investors in their search for efficient portfolios.
Our empirical tests do not show any exposure of microfinance
institutions to global capital markets, but significant exposure
regarding domestic GDP, suggesting that microfinance investments may
have useful portfolio diversification value for international investors,
not for domestic investors lacking significant country risk
diversification options. |
| URI: | http://hdl.handle.net/2451/27406 |
| Appears in Collections: | Finance Working Papers
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