Do microfinance investment managers add value, and how?
The purpose of this paper is to analyse and describe whether or not microfinance investment managers add value for their clients and investors, and how, which is important to enhance the understanding of the microfinance investment market. This is achieved by analysing whether microfinance investment managers deliver on their promise of a double bottom line with social and financial performance. This analysis is based on a database of a pioneering microfinance investment manager, including data on 1,465 loans to microfinance institutions (MFI) from 2003 to 2014. The results are based on descriptive analyses and a logistic regression analysis. The results of this paper’s analysis provide the following indications: First, microfinance investment managers add value by acting as stewards for socially responsible investors. Second, microfinance investment managers as intermediaries have provided a predictable and stable source of funding to MFIs as regards interest rate costs and loan duration to maturity over the past 10 years, despite the financial crisis in 2008. Third, the microfinance market is associated with high credit risk and microfinance investment managers provide risk management and diversification.