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Small Money Big Impact

Book Description

Make your money make a difference—and enjoy attractive returns

Small Money, Big Impact explores and explains the globally growing importance of impact investing. Today, the investor's perspective has become as important as the actual social impact. Based on their experience with over 25 million micro borrowers, the authors delve into the mechanics, considerations, data and strategies that make microloans and impact investing an attractive asset class. From the World Bank to the individual investor, impact investing is attracting more and more attention. Impact investing is a global megatrend and is reshaping the way people invest as pension funds, insurance companies, foundations, family offices and private investors jump on board. This book explains for the first time how it works, why it works and what you should know if you're ready to help change the world.

Impact investing has proven over the last 20 years as the first-line offense against crushing poverty. Over two billion people still lack access to basic financial services, which are essential for improving their livelihood. Investors have experienced not only social and environmental impact, but have received attractive, stable and uncorrelated returns for over 15 years. This guide provides the latest insights and methodologies that help you reap the rewards of investing in humanity.

  • Explore the global impact investing phenomenon
  • Learn how microloans work, and how they make a difference
  • Discover why investors are increasingly leaning into impact investing
  • Consider the factors that inform impact investing decisions

Part social movement and part financial strategy, impact investing offers the unique opportunity for investors to power tremendous change with a small amount of money— expanding their portfolios as they expand their own global impact. Microfinance allows investors at any level to step in where banks refuse to tread, offering opportunity to those who need it most. Small Money, Big Impact provides the expert guidance you need to optimize the impact on your portfolio and the world.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Foreword
  5. Preface
  6. Acknowledgments
  7. About the Authors
  8. Chapter 1: Introduction
    1. 1.1 Fighting Poverty
    2. 1.2 Investing in Financial Infrastructure
    3. 1.3 Content Overview
    4. Notes
  9. Chapter 2: Microfinance – the Concept
    1. 2.1 History
    2. 2.2 Definition and Goals
    3. 2.3 Double Bottom Line
    4. 2.4 Financial Inclusion
    5. 2.5 Market Participants
    6. 2.6 Impact Investing
    7. 2.7 Preliminary Conclusions
    8. Notes
  10. Chapter 3: The Microfinance Value Chain
    1. 3.1 The Protagonists and Their Tasks
    2. 3.2 Regulatory Environment
    3. 3.3 Development Finance Institutions
    4. 3.4 Market Overview
    5. 3.5 Geneva: Birthplace of Modern Microfinance
    6. 3.6 Preliminary Conclusions
    7. Notes
  11. Chapter 4: Micro Entrepreneurs
    1. 4.1 Definition
    2. 4.2 Needs and Requirements
    3. 4.3 Micro Entrepreneurs
    4. 4.4 Preliminary Conclusions
    5. Notes
  12. Chapter 5: Microfinance Institutions
    1. 5.1 Definition and Goals
    2. 5.2 Types of MFIs
    3. 5.3 MFI Funding
    4. 5.4 Services
    5. 5.5 Regulation
    6. 5.6 Preliminary Conclusions
    7. Notes
  13. Chapter 6: Lending Methodologies
    1. 6.1 Traditional Credit Theory and Microfinance
    2. 6.2 Lending Methodologies
    3. 6.3 Socio‐Economic Factors
    4. 6.4 Late Payments and Over‐Indebtedness of Clients
    5. 6.5 Default Prevention and Restructuring
    6. 6.6 Occupation: Loan Officer
    7. 6.7 Preliminary Conclusions
    8. Notes
  14. Chapter 7: Loan Pricing
    1. 7.1 Interest Rate Components
    2. 7.2 Setting Sustainable Interest Rates
    3. 7.3 Regional Differences
    4. 7.4 Loan Recipients’ Willingness to Repay
    5. 7.5 Preliminary Conclusions
    6. Notes
  15. Chapter 8: Social Performance Management
    1. 8.1 Social Performance
    2. 8.2 Measuring Social Performance
    3. 8.3 Measuring the Outcome of Microfinance
    4. 8.4 Social Rating Agencies
    5. 8.5 Technical Assistance
    6. 8.6 Linking Social Performance with Profitability
    7. 8.7 Preliminary Conclusions
    8. Notes
  16. Chapter 9: Beyond the Reach of Microfinance?
    1. 9.1 Prejudices and Reservations
    2. 9.2 Preliminary Conclusions
    3. Notes
  17. Chapter 10: Investing in Microfinance
    1. 10.1 Market Development
    2. 10.2 Microfinance Investment Vehicles
    3. 10.3 The Investment Process
    4. 10.4 Loan Agreements and Pricing Policy
    5. 10.5 Microfinance in the Overall Investment Portfolio
    6. 10.6 Incentives for Investing in Microfinance
    7. 10.7 Preliminary Conclusions
    8. Notes
  18. Chapter 11: Real and Financial Economy
    1. 11.1 Microfinance Is Crisis‐Proof
    2. 11.2 Real Economy and Local Influencing Factors
    3. 11.3 Financial Economy
    4. 11.4 Stability Mechanisms
    5. 11.5 Preliminary Conclusions
    6. Notes
  19. Chapter 12: Discussion of Results and Conclusions
    1. 12.1 Win‐Win‐Win
    2. 12.2 Onwards and Upwards
    3. Notes
  20. Appendix A: Example of a Loan Application
  21. Appendix B: Due Diligence of Socio‐Economic Impact Factors
  22. List of Abbreviations
  23. Glossary
  24. References
  25. Photo Credits
  26. Index
  27. End User License Agreement