Lecture 30 - Building the market for investing in microfinance. The following will be discussed in this chapter: Credit bureaus and credit scoring, building the market for investing in microfinance.
veloping economies, because even in advanced economies credit bureaus not include everyone In the United States, many lowincome people, especially youth and recent immigrants, lack credit histories and are closed out of the mainstream system • The Value of Credit Bureaus for the People whoBOP have suffered problem Market periods need to rebuild their credit scores The most popular product of ACCION’s U.S arm is its Credit Builder loan, a small stepped loan of $500 to $750 aimed at helping clients develop a positive credit history • The Value of Credit Bureaus for the Another initiative, alternative credit BOPthe Market bureau MicroBilt, is developing credit scores weighted toward the kinds of payments low-income people make— like rent and utilities payments— rather than on bank loan experience BUILDING THE MARKET FOR INVESTING IN MICROFINANCE • Many committed professionals are dedicating themselves to integrating the market for microfinance investment into international capital markets • BUILDING THE MARKET FOR INVESTING IN The hallmarks of a mature microfinance MICROFINANCE investment market will include ready availability of high-quality information about MFIs, a wide range of investors, and active trading with ease of entry and exit When this day comes, MFIs will be able to raise funds at favorable costs that accurately reflect their risk and return profiles • Information for Investors:Advisors, The biggest issue in market creation is Data, and Ratings getting the right information into the hands of prospective investors Wall Street professionals are accustomed to clicking on Bloomberg.com for an instant flood of data But there is no microfinance page on Bloomberg • Information for Investors:Advisors, When The Economist took its first serious Data, and Ratings look at microfinance in 2005, it complained about the lack of data and the obscure metrics that meant something to microfinance mavens but nothing to standard investors Frustration almost jumped off the page • Information for Investors:Advisors, For theirData, part, MFIs up” responding and“grew Ratings to donors’ information needs Only recently are they learning to understand how investors use information to make decisions At first, MFIs with nonprofit origins may even have greeted investor requests for information as “none of your business” or as signaling lack of trust • Information for Investors:Advisors, The information infrastructure now Data, and Ratings developing to support microfinance is multifaceted, including a central data source (the Microfinance Information Exchange or MIX), mainstream and specialized investment advisors, investor associations, and rating agencies Summary Credit Bureaus and Credit Scoring BUILDING THE MARKET FOR INVESTING IN MICROFINANCE ... mature microfinance MICROFINANCE investment market will include ready availability of high-quality information about MFIs, a wide range of investors, and active trading with ease of entry and exit... infrastructure now Data, and Ratings developing to support microfinance is multifaceted, including a central data source (the Microfinance Information Exchange or MIX), mainstream and specialized investment... for an instant flood of data But there is no microfinance page on Bloomberg • Information for Investors:Advisors, When The Economist took its first serious Data, and Ratings look at microfinance