Skip to main content

Commercial banks and microfinance: Downscaling versus equity investments in MFIs in Peru

The full text article is not available for purchase.

The publisher only permits individual articles to be downloaded by subscribers.

Abstract:

In recent years, more commercial banks have been entering the microfi nance market as there are opportunities for sustainable growth and revenue. This study analyses and compares the cases of four major banks that acquired Peruvian microfinance institutions. The paper argues that banks have sought equity investments in MFIs to attain deeper outreach at the 'bottom of the pyramid'. Conversely, MFI shareholders were motivated to sell because of attractive valuations paid by the banks, difficulty competing with larger investors interested in the MFI sector, and in order to offset the risk of portfolio concentration in microfinance investments. This paper concludes that bank participation in the microfinance sector will be both profitable and have a positive social impact in the medium term, since it will foster reduced interest rates, greater efficiency, and improved risk management.

Keywords: ACQUISITION; BANKS; DOWNSCALING; MICROFINANCE; PERU

Document Type: Research Article

DOI: http://dx.doi.org/10.3362/1755-1986.2012.022,ISSN:

Publication date: September 1, 2012

papub/edm/2012/00000023/00000003/art00005
dcterms_title,dcterms_description,pub_keyword
6
5
20
40
5

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
X
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more