Lecture 25 - Models of financing inclusive finance. The following will be discussed in this chapter: Supply and demand, what has changed? debt deals, bank loans, the microagent model: barefoot agents, models of financing inclusive finance. | Summary of the Last lecture The Microagent Model: Barefoot Agents MODELS OF FINANCING INCLUSIVE FINANCE Supply and Demand MODELS OF FINANCING INCLUSIVE FINANCE Supply and Demand By 2007, total international investment in microfinance topped $ billion, a dramatic increase in only three years. Much of the increase came from private investors, both institutional and individual. Supply and Demand While many of these new investors were attracted by the social impact of microfinance, others sought solely commercial returns. Supply and Demand Among the investors in microfinance are: The rich. High-net-worth individuals and private banking clients, many looking to combine social and financial returns. Supply and Demand Ordinary people. Retail investors accessing such vehicles as Oikocredit, a European fund, and Kiva, an Internet-based social investment vehicle. Most of these investors are strongly socially motivated, and some treat their investments as a charitable activity. Supply and . | Summary of the Last lecture The Microagent Model: Barefoot Agents MODELS OF FINANCING INCLUSIVE FINANCE Supply and Demand MODELS OF FINANCING INCLUSIVE FINANCE Supply and Demand By 2007, total international investment in microfinance topped $ billion, a dramatic increase in only three years. Much of the increase came from private investors, both institutional and individual. Supply and Demand While many of these new investors were attracted by the social impact of microfinance, others sought solely commercial returns. Supply and Demand Among the investors in microfinance are: The rich. High-net-worth individuals and private banking clients, many looking to combine social and financial returns. Supply and Demand Ordinary people. Retail investors accessing such vehicles as Oikocredit, a European fund, and Kiva, an Internet-based social investment vehicle. Most of these investors are strongly socially motivated, and some treat their investments as a charitable activity. Supply and Demand • Institutional investors. Pension funds, insurance companies, and the like, such as TIAA-CREF, are bound by prudential rules that restrict them to top-quality investments. For microfinance, attracting investors like these represents a major threshold crossed. Supply and Demand • Risk-taking investors like hedge funds and venture capitalists. • Banks with liquidity to place, especially banks with developing-nation operations. Supply and Demand • Sovereign wealth funds, particularly from non-OECD countries, with excess liquidity. Supply and Demand Each of these investor types needs investment vehicles fitted to their special characteristics. Supply and Demand At one end of the spectrum, MicroPlace leverages eBay technology to lower the cost of servicing tiny transactions, making it possible to work with $500 investments. Supply and Demand At the other end, a venture capital firm like Sequoia has the skills and risk appetite to invest directly in MFI equity, as it did in SKS, a .
