Commercial banks and microfinance: Downscaling versus equity investments in MFIs in Peru
In recent years, more commercial banks have been entering the microfinance 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.Armendáriz, B. and Szafarz, A. (2009) ‘On mission drift in microfinance institutions’, Working Paper CEB no. 09-015.RS, Universite Libre de Bruxelles, Brussels.
Asociación de Instituciones de Microfinanzas del Perú (ASOMIF) (2011) Resumen Ejecutivo Reporte Trimestral II 2011 [website], <www.asomifperu.com≯ [accessed 15 October 2011].
Development Alternatives International (DAI) (2006) A Study of Microfinance in Latin America and the Caribbean: Recommendations for Technical Assistance and Investment, Final Report, study submitted to IFC, DAI, Washington, D.C.
Economist Intelligence Unit (2011) Global Microscope on the Microfinance Business Environment 2011 [website], <www.eiu.com≯ [accessed 1 November 2011].
Glisovic, J., Gonzalez, H., Saltuk, Y. and Rozeira de Mariz, F. (2012) ‘Volume growth and valuation contraction: Global microfinance equity valuation survey 2012’, Access to Finance FORUM No. 3, CGAP, Washington, D.C.
Portocarrero, F. and Byrne, G. (2004) ‘Estructura de Mercado y Competencia en el Microcrédito’, in Carolina Trivelli (ed.), Mercado y Gestión del Microcrédito en el Perú [website], pp. 49–140, Consorcio de Investigación Económica y Social, Lima, <http://cies.org.pe≯ [accessed 1 September 2011]. http://cies.org.pe
SBS (2008), Resolución no. 11356, ‘Reglamento para Evaluación y Clasificación del Deudor y la Exigencia de Provisiones’, 19 November, p. 12.
Semana Económica (2009) No es lo mejor hacer microfinanzas con la red de un banco universal (interview with Walter Bayly, BCP CEO), 13 September, Lima.
Webb, R., Inga, P. and Conger, L. (2009) The Mustard Tree: A History of Microfinance in Peru, Instituto del Peru, Universidad de San Martin de Porres, Lima.
Yunus, M. (2011) ‘Sacrificing microcredit for megaprofits’, New York Times [website], 14 January, <www.nytimes.com/2011/01/15/opinion/15yunus.html≯ [10 September 2011]. www.nytimes.com/2011/01/15/opinion/15yunus.html
Armendáriz, B. and Szafarz, A. (2009) ‘On mission drift in microfinance institutions’, Working Paper CEB no. 09-015.RS, Universite Libre de Bruxelles, Brussels.
Asociación de Instituciones de Microfinanzas del Perú (ASOMIF) (2011) Resumen Ejecutivo Reporte Trimestral II 2011 [website], <www.asomifperu.com≯ [accessed 15 October 2011].
Development Alternatives International (DAI) (2006) A Study of Microfinance in Latin America and the Caribbean: Recommendations for Technical Assistance and Investment, Final Report, study submitted to IFC, DAI, Washington, D.C.
Economist Intelligence Unit (2011) Global Microscope on the Microfinance Business Environment 2011 [website], <www.eiu.com≯ [accessed 1 November 2011].
Glisovic, J., Gonzalez, H., Saltuk, Y. and Rozeira de Mariz, F. (2012) ‘Volume growth and valuation contraction: Global microfinance equity valuation survey 2012’, Access to Finance FORUM No. 3, CGAP, Washington, D.C.
Portocarrero, F. and Byrne, G. (2004) ‘Estructura de Mercado y Competencia en el Microcrédito’, in Carolina Trivelli (ed.), Mercado y Gestión del Microcrédito en el Perú [website], pp. 49–140, Consorcio de Investigación Económica y Social, Lima, <http://cies.org.pe≯ [accessed 1 September 2011]. http://cies.org.pe
SBS (2008), Resolución no. 11356, ‘Reglamento para Evaluación y Clasificación del Deudor y la Exigencia de Provisiones’, 19 November, p. 12.
Semana Económica (2009) No es lo mejor hacer microfinanzas con la red de un banco universal (interview with Walter Bayly, BCP CEO), 13 September, Lima.
Webb, R., Inga, P. and Conger, L. (2009) The Mustard Tree: A History of Microfinance in Peru, Instituto del Peru, Universidad de San Martin de Porres, Lima.
Yunus, M. (2011) ‘Sacrificing microcredit for megaprofits’, New York Times [website], 14 January, <www.nytimes.com/2011/01/15/opinion/15yunus.html≯ [10 September 2011]. www.nytimes.com/2011/01/15/opinion/15yunus.html
Armendáriz, B. and Szafarz, A. (2009) ‘On mission drift in microfinance institutions’, Working Paper CEB no. 09-015.RS, Universite Libre de Bruxelles, Brussels.
Asociación de Instituciones de Microfinanzas del Perú (ASOMIF) (2011) Resumen Ejecutivo Reporte Trimestral II 2011 [website], <www.asomifperu.com≯ [accessed 15 October 2011].
Development Alternatives International (DAI) (2006) A Study of Microfinance in Latin America and the Caribbean: Recommendations for Technical Assistance and Investment, Final Report, study submitted to IFC, DAI, Washington, D.C.
Economist Intelligence Unit (2011) Global Microscope on the Microfinance Business Environment 2011 [website], <www.eiu.com≯ [accessed 1 November 2011].
Glisovic, J., Gonzalez, H., Saltuk, Y. and Rozeira de Mariz, F. (2012) ‘Volume growth and valuation contraction: Global microfinance equity valuation survey 2012’, Access to Finance FORUM No. 3, CGAP, Washington, D.C.
Portocarrero, F. and Byrne, G. (2004) ‘Estructura de Mercado y Competencia en el Microcrédito’, in Carolina Trivelli (ed.), Mercado y Gestión del Microcrédito en el Perú [website], pp. 49–140, Consorcio de Investigación Económica y Social, Lima, <http://cies.org.pe≯ [accessed 1 September 2011]. http://cies.org.pe
SBS (2008), Resolución no. 11356, ‘Reglamento para Evaluación y Clasificación del Deudor y la Exigencia de Provisiones’, 19 November, p. 12.
Semana Económica (2009) No es lo mejor hacer microfinanzas con la red de un banco universal (interview with Walter Bayly, BCP CEO), 13 September, Lima.
Webb, R., Inga, P. and Conger, L. (2009) The Mustard Tree: A History of Microfinance in Peru, Instituto del Peru, Universidad de San Martin de Porres, Lima.
Yunus, M. (2011) ‘Sacrificing microcredit for megaprofits’, New York Times [website], 14 January, <www.nytimes.com/2011/01/15/opinion/15yunus.html≯ [10 September 2011]. www.nytimes.com/2011/01/15/opinion/15yunus.html
Armendáriz, B. and Szafarz, A. (2009) ‘On mission drift in microfinance institutions’, Working Paper CEB no. 09-015.RS, Universite Libre de Bruxelles, Brussels.
Asociación de Instituciones de Microfinanzas del Perú (ASOMIF) (2011) Resumen Ejecutivo Reporte Trimestral II 2011 [website], <www.asomifperu.com≯ [accessed 15 October 2011].
Development Alternatives International (DAI) (2006) A Study of Microfinance in Latin America and the Caribbean: Recommendations for Technical Assistance and Investment, Final Report, study submitted to IFC, DAI, Washington, D.C.
Economist Intelligence Unit (2011) Global Microscope on the Microfinance Business Environment 2011 [website], <www.eiu.com≯ [accessed 1 November 2011].
Glisovic, J., Gonzalez, H., Saltuk, Y. and Rozeira de Mariz, F. (2012) ‘Volume growth and valuation contraction: Global microfinance equity valuation survey 2012’, Access to Finance FORUM No. 3, CGAP, Washington, D.C.
Portocarrero, F. and Byrne, G. (2004) ‘Estructura de Mercado y Competencia en el Microcrédito’, in Carolina Trivelli (ed.), Mercado y Gestión del Microcrédito en el Perú [website], pp. 49–140, Consorcio de Investigación Económica y Social, Lima, <http://cies.org.pe≯ [accessed 1 September 2011]. http://cies.org.pe
SBS (2008), Resolución no. 11356, ‘Reglamento para Evaluación y Clasificación del Deudor y la Exigencia de Provisiones’, 19 November, p. 12.
Semana Económica (2009) No es lo mejor hacer microfinanzas con la red de un banco universal (interview with Walter Bayly, BCP CEO), 13 September, Lima.
Webb, R., Inga, P. and Conger, L. (2009) The Mustard Tree: A History of Microfinance in Peru, Instituto del Peru, Universidad de San Martin de Porres, Lima.
Yunus, M. (2011) ‘Sacrificing microcredit for megaprofits’, New York Times [website], 14 January, <www.nytimes.com/2011/01/15/opinion/15yunus.html≯ [10 September 2011]. www.nytimes.com/2011/01/15/opinion/15yunus.html
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Langevin, Marie
Canadian Journal of Development Studies / Revue canadienne d'études du développement, Vol. 38 (2017), Iss. 4 P.487
https://doi.org/10.1080/02255189.2017.1294529 [Citations: 3]Las ONG microfinancieras peruanas: ¿siguen manteniendo su misión social?
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