MASTER THESIS Analysis of publicly listed microfinance equity diversification potential and possible mission drift Karel Pfeffer 2017 Abstract The objective of this master thesis is to investigate, whether equity of publicly listed Microfinance institutions (MFIs) can be used for portfolio diversification, while these MFIs still maintain its original social mission. To explore these two aspects of publicly listed MFIs, this study is split in two major parts. The first part is focused on the comparison of risk and return characteristics of selected MFIs shares with conventional financial institutions shares and market equity benchmark indices. The analysis indicates no significant diversification potential in publicly listed microfinance equity. The second part of this thesis is exploring the impact of IPO on publicly listed MFIs social outreach. It was found some evidence of a drift from the original social mission among selected MFIs. However, there is not enough evidence to claim that for-profit investment cause long-term significant operational change of MFIs.

This diploma thesis deals with research in global microfinance sector. Currently the paper is focused at techniques of audit used by microfinance investment vehicles to control or to check the transparency or reliability of microfinance institutions. Also, this audit techniques could be used to check achievement of the social goals of microfinance institutions. The analyzed data are from last decade (between 2005 and 2015) provided by microfinance institutions to microfinance web based platform Microfinance Institution Exchange Market. The audit techniques examined in this thesis are the following: due diligence, rating and social performance. This paper insists on objective assessment of all data and information provided freely which relate to audit of microfinance institutions. These data and information are progressively investigated through the whole thesis in two main areas, i.e. quantitative and qualitative. The main objective of this paper is to find the most effective way how to do audit in microfinance or to find out the combination of the available methods.

Diplomová práce se zabývá otázkou mikrofinancí v rozvojovém světě. Cílem práce je zjistit, jakou hrají mikrofinance roli v dnešním světě, jakým vývojem prošly a zda jsou mikro finanční instituce z dlouhodobého hlediska udržitelné. Dále je otázka mikrofinancí aplikovaná na bangladéšskou Grameen banku, která je považována za průkopníka mikrokreditu ve světě. Budou zkoumány principy jejího fungování, kritéria pro poskytnutí půjček a hlavní důraz bude kladen na analýzu inovativního systému Grameen II. Poslední část práce pojednává o chudobě v Bangladéši a také zkoumá, jaký tam mají mikrofinance vliv na chudé lidi.

Microfinance has been seen as a key tool for poverty reduction in developing countries. Target groups of microfinance are very poor people who have no access to any financial resources and need loans. Microcredits help the poor in running their small businesses or in a creation of its own job opportunities. The loans are often embezzlemented, are not financial sustainable in the long term, and are frequently critised. The question is if microfinance is real universal cure and which influence has on elimination poverty and social even economical effect. It also considers a perspective of model preferences focused on business (conditional high interests, possibility to contact intermediaters, gaining easier access into external financial sources) or a charity (more resistant to crisis thanks to using internal financial sources). In general, Latin America has excellent conditions for microfinance; the macro-economic growth which countries in Latin America had shown during the last decades set up advantageous conditions for well-known microfinance institutions and its development. Microfinance sector contributes by its profits to the common financial institutions which have already got a significant position in the market. In principle, Mexico struggles for better conditions for the poorest class of the population and due to this fact offers products of microcredits as the assistance to start-up small businesses. From the economic point of view, Mexico tries to be much more self-sufficient and sustainable. Microfinance institutions earn regularly an undisputed importance in the process of regional expansion, representing a crucial factor in the alleviation of poverty likewise insecurity for large segments of the inhabitants. The work is based on information from relevant sources that can easily identify the current status of microfinance. This thesis researches the microfinancial sector and the program FINCA (Foundation for International Community Assistance), including causing non-governmental organizations in Mexico. The purpose of this paper is to focus on the current situation of functioning microfinance sector in selected Mexican states as well as to identify impacts of microfinance activities in this country. It describes microfinance sector due to its lack of opportunities to gain microcredit. Credit distribution and its awareness about these services is passed. Administrative procedures are difficult and information shortage restricts credit accessibility. This leads more in usage informal sector, based on family members or groups. The paper demonstrates suggestions for improving and operating in this sector that might be involved in legal framework for microfinance in Mexico.

Diplomová práce rozebírá formy poskytování rozvojové pomoci mezinárodním společenstvím, popisuje přístup jednotlivých zúčastněných stran a analyzuje efektivnost současné rozvojové pomoci. Dále nabízí nové alternativní způsoby rozvojové pomoci, především pak systém mikrofinancování. Porovnává výhody a přínos mikrofinancí a možné překážky. V poslední části popisuje nově zaváděnou formu, tzv. sociální podnikání a ilustruje jeho fungování na konkrétním příkladu spolupráce dvou společností v Bangladéši.

This thesis deals with the matter of development and methods of formation and goals of providing the development asistence. Furthermore, it describes the attitudes of various stakeholders participating in development cooperation. The author, in addition, offers tools for success in the fight against poverty and for achieving sustainable socio-economic development. Emphasis is placed on the microfinance system, which serves to ensure that poor people are given the opportunity to do business and escape the poverty by their working and effort.

In the introduction of the master thesis, the historical development and the reasons for the emergence of microfinance are described. The thesis focuses on comparison of the functioning of microfinance in various developing regions of the world, as well as on the analysis of the overall functioning, effectiveness, strengths and weaknesses, potential threats and opportunities in the microfinance markets. The conclusion offers several possibilities and insights on how microfinance could be more efficient in financial terms. The thesis also presents a brief evaluation of the benefits of microfinance and based on findings provides a prediction of further development of microfinance.

The thesis discusses economic development and fight against poverty in Kenya.The aim is to prove that the development assistance is not the the main incentive for the economic development in Kenya and the kenyan government should focus on alternative development paths. The paper tries to analyze development assistance and to find arguments against it, describes other forms of capital inflow, such as foreign trade, foreign investment and microfinance. The first chapter defines the basic concepts and puts the arguments for and against development aid. The second chapter discusses alternative paths of development. In the third chapter the paper starts with the analytical section where political and economic situation in Kenya, development aid and business environment are analyzed. The importance of foreign trade, foreign investment and microfinance is demonstrated. The last chapter analyzes the selected microfinance institutions in Kenya and it contains a case study from the field.

The first chapter provides a comprehensive overview of microfinance academic literature with emphasis on recent innovations, trends and efficiency. In particular, we focus on controversial issues of microfinance, such as commercialization, regulation, interest rate policy and the balance between outreach and performance of MFIs. The next chapter especially investigates the role of public expenditures and general government debt in microfinance performance in Latin America and the Caribbean. Microfinance institutions finance their business activities primary with clients' deposits, equity or with external funding. The aim of the third chapter is to verify whether the external funding, macroeconomic development and the size of banking sector have some impact on a microfinance performance. This study investigates, as well, the possible reasons why many microfinance institutions have gradually experienced a decrease in the share of female borrowers in their portfolios over the last few years. The final chapter is focused on the impact of macroeconomic environment and internal variables of the microfinance sector on microfinance interest rates.

The objective of this thesis is to evaluate, whether microfinance are a suitable instrument for development aid. It maps the factors that caused the microfinance crisis in 2008 to 2010 and validates the proposed reform measures. It describes and compares the effeciency and results of microfinance substitutes in the field of development aid, which are governmental, non-governmental and commercial programmes with similar objectives declared. It also analyses data from 2008 to 2014 from the point of view of social indicator reporting and acceptance of the new concept among microfinance institutions. Conclusion is reached based on these three components: ability to reform microfinance, possibilities of other programmes and situation in social reporting. Microfinance isn´t a suitable instrument for poverty reduction as such, but serves as a complement to provide for development of poor regions and financial inclusion of poor inhabitants.