Series editor(s): Professor Robert Thornton, Professor J. Richard Aronson
Subject Area: Economics
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|Title:||Microfinance meets the market|
|Author(s):||Robert Cull, Asli Demirgüç-Kunt, Jonathan Morduch|
|Volume:||92 Editor(s): Todd A. Watkins, Karen Hicks ISBN: 978-1-84950-681-6 eISBN: 978-1-84950-682-3|
|Citation:||Robert Cull, Asli Demirgüç-Kunt, Jonathan Morduch (2009), Microfinance meets the market, in Todd A. Watkins, Karen Hicks (ed.) Moving Beyond Storytelling: Emerging Research in Microfinance (Contemporary Studies in Economic and Financial Analysis, Volume 92), Emerald Group Publishing Limited, pp.1-30|
|DOI:||10.1108/S1569-3759(2009)0000092004 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Article type:||Chapter Item|
In April 2007, Banco Compartamos of Mexico held a public offering of its stock in which insiders sold 30 percent of their holdings. The sale was over-subscribed by 13 times, and Compartamos was soon worth $1.6 billion (for details of the story, see Rosenberg, 2007; Malkin, 2008; Accion International, 2007). A month before the offering, the Economist (2007) had written: “Compartamos may not be the biggest bank in Mexico, but it could be the most important.” Compartamos’ claim to importance stems from its clients – not from their elite status, but from the opposite. The bank describes them as low-income women, taking loans to support tiny enterprises like neighborhood shops or tortilla-making businesses. The loans the women seek are small – typically hundreds of dollars rather than many thousands – and the bank requires no collateral. It is a version of “microfinance,” the idea associated with Muhammad Yunus and Grameen Bank of Bangladesh, winners of the 2006 Nobel Peace Prize. For Yunus, microfinance can unleash the productivity of cash-starved entrepreneurs and raise their incomes above poverty lines. It is a vision of poverty reduction that centers on self-help rather than direct income redistribution.
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