Paper
Securitization in Microfinance: Creating Saving and Investment Instruments for the Poor
Integrating microfinance into the formal financial markets
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This paper explores the viability of implementing a scheme that improves current microfinance structured finance funding strategies, fulfilling the saving and investing needs of MF customers, while helping financial market development and solving microlenders' funding issues. A lot of changes are needed in order to enhance microfinance's ability to empower the poor and help MFIs access funds. These include:
- Investors must move away from the traditional view of risk, and confidently invest in microfinance projects;
- Microfinance requires a risk analysis approach that is based on the future;
- Potential investors must rethink the market size of microfinance;
- MFIs must realize the importance of standardizing procedures and providing relevant and clear information;
- Governments must enact laws and regulations that make things easier and safe for investors to invest and for MFIs to widen their services ;
- International foundations and organizations must increase and vary their methods of support to microfinance.
The paper states that the entrepreneurial world can contribute to microfinance through their corporate social responsibility initiatives. These suggestions serve as a general checklist for issues that must be addressed to integrate microfinance into formal financial markets.
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