Microfinance Institutions

Transcription

1 Microfinance Institutions History of Business Networks Dr. Gordon Winder Seminar für Wirtschaftsgeschichte LMU München Date: Speaker: Tilman Weber

2 Do you know him? Lasting Peace can not be achieved unless large population groups find ways in which to break break out of poverty. Micro-credit is such means.. Dr. Muhammad Yunus 2006 Winner Nobel Prize Peace Managing Director Grameen Bank 2

3 Agenda 1. What is Mircofinance? 2. How does Microfinance work? 3. How has Microfinance evolved? 4. Has Microfinance made the world a better place? 3

4 1. What is Microfinance? Microfinance Micro-Credit - small credits ans loans - high interest rates Microinsurance - insurance for the poor Microsavings - cheap bank accounts - transfers and withdrawals 4

5 2. How does Microfinance Work? e. g. Microcredits The poor usually need only small credits these credits are provided at reasonable interest rates Institutions use additional information to overcome asymmetrical information penalties raise costs of defaulting 5

6 2. How does Microfinance Work? e. g. Microsavings The poor usually do not save much they are not familiar with using a bank account they need international transfers, but only few withdrawals 6

7 2. How does Microfinance Work? e. g. Microsavings the bank offers saving accounts at low costs interest rates are paid the bank can provide training on how to use a bank account a limited number of withdrawals and transfers is provided 7

8 3. How has Microfinance evolved? Europe in 19th Century Microfinance in 20th Century Mircofinance in 21st Century 8

9 3. How has Microfinance evolved? Europe in 19th Century Lack of bank services for the poor In Germany founding of savings banks ( Sparkassen ) and credit cooperatives ( Raiffeisen ) In Ireland loan funds were raised both were supported by local governments 9

10 3. How has Microfinance evolved? Microfinance in the 20th Century 10 Yunus founded the Grameen-Bank in Bangladesh Development theory discovered microfinance to be promising way of fighting poverty Microfinance-Institutions established all over the world, but mostly in Africa and Asia

11 3. How has Microfinance evolved? Microfinance in the 20th Century Microfinance-Institutions were supported by governments in developing and developed economies They provided complementary products to the domestic banks Microfinance is common also in developed countries (e. g. USA) 11

12 3. How has Microfinance evolved? Mircofinance in the 21st Century Microfinance got integrated in capital markets International Banks are increasingly engaging in Microfinance International Banks are offering securisation of Microfinance-products 12

13 3. How has Microfinance evolved? Microfinance in the 21st Century Rating-agencies especially for Microfinance appeared, classical ratingagencies are turning to Microfinance 13

14 3. How has Microfinance evolved? Microfinance in the 21st Century Deutsche Bank AG ABN AMRO Barclays Citigroup Commerzbank AG HSBC ING Group Rabobank Group Société Générale Credit Suisse Banco Santander 14

15 4. Has Microfinance made the world a better place? Only a small part of the microfinance Institutions at work is profitable, most rely on subsidies and donations Empiricial evidence on the success of Microfinance is inconclusive The involvement of capital market actors may threaten the mission of Microfinance International Banks do not have any competitive advantage in Microfinancebusiness 15

16 References A Billion to gain? ; Crjins, G.et al.; ING Microfinance Support; 2006 How can $100 change an economy? ; UN Department of Public Information; 2004 The Microfinance Profitability Index; Abrams, J; MicroBanking Bulletin; 2005 The Microfinance Promise ; Murdoch, J; Journal of Economic Literature 37(4);pp ;

17 References Cooperatives As Information Machines; German Rural Credit Cooperatives, ; Guinnane, T.W.; The Journal of Economic History 61(2); pp ; 2001 Microcredit in Prefamine Ireland ; Hollis, A.; Sweetman, A; Exploratiobs of Economic History 35; pp ;