Small Money Big Impact - Fighting Poverty With Microfinance

Make your money make a difference--and enjoy attractive returns
 
Small Money, Big Impact explores and explains the globally growing importance of impact investing. Today, the investor's perspective has become as important as the actual social impact. Based on their experience with over 25 million micro borrowers, the authors delve into the mechanics, considerations, data and strategies that make microloans and impact investing an attractive asset class. From the World Bank to the individual investor, impact investing is attracting more and more attention. Impact investing is a global megatrend and is reshaping the way people invest as pension funds, insurance companies, foundations, family offices and private investors jump on board. This book explains for the first time how it works, why it works and what you should know if you're ready to help change the world.
 
Impact investing has proven over the last 20 years as the first-line offense against crushing poverty. Over two billion people still lack access to basic financial services, which are essential for improving their livelihood. Investors have experienced not only social and environmental impact, but have received attractive, stable and uncorrelated returns for over 15 years. This guide provides the latest insights and methodologies that help you reap the rewards of investing in humanity.
* Explore the global impact investing phenomenon
* Learn how microloans work, and how they make a difference
* Discover why investors are increasingly leaning into impact investing
* Consider the factors that inform impact investing decisions
 
Part social movement and part financial strategy, impact investing offers the unique opportunity for investors to power tremendous change with a small amount of money-- expanding their portfolios as they expand their own global impact. Microfinance allows investors at any level to step in where banks refuse to tread, offering opportunity to those who need it most. Small Money, Big Impact provides the expert guidance you need to optimize the impact on your portfolio and the world.

List of contents

Foreword ix
 
Preface xi
 
Acknowledgments xiii
 
About the Authors xv
 
CHAPTER 1 Introduction 1
 
1.1 Fighting Poverty 2
 
1.2 Investing in Financial Infrastructure 7
 
1.3 Content Overview 8
 
Notes 9
 
CHAPTER 2 Microfinance - the Concept 11
 
2.1 History 12
 
2.2 Definition and Goals 15
 
2.3 Double Bottom Line 18
 
2.4 Financial Inclusion 21
 
2.5 Market Participants 24
 
2.6 Impact Investing 25
 
2.7 Preliminary Conclusions 29
 
Notes 31
 
CHAPTER 3 The Microfinance Value Chain 33
 
3.1 The Protagonists and Their Tasks 34
 
3.2 Regulatory Environment 36
 
3.3 Development Finance Institutions 37
 
3.4 Market Overview 39
 
3.5 Geneva: Birthplace of Modern Microfinance 42
 
3.6 Preliminary Conclusions 46
 
Notes 47
 
CHAPTER 4 Micro Entrepreneurs 49
 
4.1 Definition 50
 
4.2 Needs and Requirements 52
 
4.3 Micro Entrepreneurs 59
 
4.4 Preliminary Conclusions 67
 
Notes 68
 
CHAPTER 5 Microfinance Institutions 71
 
5.1 Definition and Goals 72
 
5.2 Types of MFIs 73
 
5.3 MFI Funding 76
 
5.4 Services 85
 
5.5 Regulation 88
 
5.6 Preliminary Conclusions 94
 
Notes 96
 
CHAPTER 6 Lending Methodologies 99
 
6.1 Traditional Credit Theory and Microfinance 100
 
6.2 Lending Methodologies 101
 
6.3 Socio?-Economic Factors 104
 
6.4 Late Payments and Over?-Indebtedness of Clients 108
 
6.5 Default Prevention and Restructuring 110
 
6.6 Occupation: Loan Officer 113
 
6.7 Preliminary Conclusions 114
 
Notes 116
 
CHAPTER 7 Loan Pricing 119
 
7.1 Interest Rate Components 120
 
7.2 Setting Sustainable Interest Rates 127
 
7.3 Regional Differences 127
 
7.4 Loan Recipients' Willingness to Repay 129
 
7.5 Preliminary Conclusions 130
 
Notes 132
 
CHAPTER 8 Social Performance Management 133
 
8.1 Social Performance 134
 
8.2 Measuring Social Performance 135
 
8.3 Measuring the Outcome of Microfinance 149
 
8.4 Social Rating Agencies 151
 
8.5 Technical Assistance 153
 
8.6 Linking Social Performance with Profitability 156
 
8.7 Preliminary Conclusions 157
 
Notes 159
 
CHAPTER 9 Beyond the Reach of Microfinance? 161
 
9.1 Prejudices and Reservations 162
 
9.2 Preliminary Conclusions 171
 
Notes 172
 
CHAPTER 10 Investing in Microfinance 175
 
10.1 Market Development 176
 
10.2 Microfinance Investment Vehicles 177
 
10.3 The Investment Process 181
 
10.4 Loan Agreements and Pricing Policy 187
 
10.5 Microfinance in the Overall Investment Portfolio 191
 
10.6 Incentives for Investing in Microfinance 195
 
10.7 Preliminary Conclusions 197
 
Notes 199
 
CHAPTER 11 Real and Financial Economy 201
 
11.1 Microfinance Is Crisis?-Proof 202
 
11.2 Real Economy and Local Influencing Factors 203
 
11.3 Financial Economy 205
 
11.4 Stability Mechanisms 207
 
11.5 Preliminary Conclusions 208
 
Notes 209
 
CHAPTER 12 Discussion of Results and Conclusions 211
 
12.1 Win?-Win?-Win 212
 
12.2 Onwards and Upwards 212
 
Notes 215
 
APPENDIX A Example of a Loan Application 217
 
APPENDIX B Due Diligence of Socio?-Economic Impact Factors 221
 
List of Abbreviations 227
 

About the author

PETER A. FANCONI is the Chairman and former CEO of Swiss-based BlueOrchard Finance, one of the leading asset man- agement companies in impact investing. Peter demonstrated his entrepreneurial and social competences in various positions, including CEO of the Vontobel Private Bank, CEO of Harcourt Alternative Investments and managing partner at PwC. He also serves as Chairman of Swiss bank Graubündner Kantonalbank (GKB) and as board member of academic and charitable institutions worldwide. Peter is a renowned lecturer and published writer in the field of finance and impact investing. PATRICK SCHEURLE is the CEO of Blue-Orchard Finance. Prior, he acted as COO and CFO at BlueOrchard. His broad experience in finance includes senior positions at Bank Vontobel and Credit Suisse. He further served with a leading management consultancy focusing on governance and value creation. Patrick holds a PhD in finance from the University of St. Gallen, Switzerland, where he also held an assistant professorship. He is the author of several well-known finance books and regularly publishes on developments and research in impact investing.

Summary

Make your money make a difference and enjoy attractive returns Small Money, Big Impact explores and explains the globally growing importance of impact investing. Today, the investor's perspective has become as important as the actual social impact.

Product details

• Authors: Pa Fanconi, Peter Fanconi, Peter A Fanconi, Peter A. Fanconi, Peter A. Scheurle Fanconi, Fanconi Peter A., Patrick Scheurle, Scheurle Patrick
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 24.03.2017
• EAN: 9781119338208
• ISBN: 978-1-119-33820-8
• No. of pages: 272
• Subjects: Social sciences, law, business > Business > Business administration; Finanzwesen, SOCIAL SCIENCE / Poverty & Homelessness, BUSINESS & ECONOMICS / Finance / General, Poverty and precarity, Allg. Finanz- u. Anlagewesen, Finance & Investments, Finanz- u. Anlagewesen, Credit and credit institutions