International diversification and Microfinance

Rients Galema, Robert Lensink*, Laura Spierdijk

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review

35 Citaten (Scopus)

Samenvatting

International commercial banks, institutional investors, and private investors have become increasingly interested in financing microfinance institutions (MFIs). This paper investigates whether adding microfinance funds to a portfolio of risky international assets yields diversification gains. By using mean-variance spanning tests with short-sale constraints, we find that investing in microfinance may be attractive for investors seeking a better risk-return profile. Specifically, the analysis suggests that investing in MFIs from Latin America, or microfinance and rural banks yields more efficient portfolios. In contrast, adding MFIs from Africa or microfinance NGOs to a portfolio of international assets is not beneficial for a mean-variance investor. (C) 2011 Elsevier Ltd. All rights reserved.

Originele taal-2English
Pagina's (van-tot)507-515
Aantal pagina's9
TijdschriftJournal of International Money and Finance
Volume30
Nummer van het tijdschrift3
DOI's
StatusPublished - apr-2011

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