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Analysis of publicly listed microfinance equity diversification potential and possible mission drift
Thesis title in Czech: Analýza cenných papírů mikrofinančních institucí a vlivu jejich veřejného obchodovaní na fungování těchto institucí
Thesis title in English: Analysis of publicly listed microfinance equity diversification potential and possible mission drift
Key words: mikrofinance
English key words: microfinance
Academic year of topic announcement: 2016/2017
Type of assignment: diploma thesis
Thesis language: angličtina
Department: Institute of Economic Studies (23-IES)
Supervisor: prof. Ing. Karel Janda, Dr., Ph.D., M.A.
Author: hidden - assigned by the advisor
Date of registration: 09.11.2016
Date of assignment: 09.11.2016
Date and time of defence: 08.02.2017 08:30
Venue of defence: Opletalova - Opletalova 26, O105, Opletalova - místn. č. 105
Date of electronic submission:05.01.2017
Date of proceeded defence: 08.02.2017
Reviewers: PhDr. František Čech, Ph.D.
URKUND check:
• Does Commercial Microfinance Belong to the Financial Sector? Lessons from the Stock Market (Briere, Szafarz, 2014)
• Investment in Microfinance Equity: Risk, Return, and Diversification Benefits (Briere, Szafarz, 2011)
• A study of Four Listed Micro Finance Institutions (Monroy, Huerga 2012)
• New Partnerships for Innovation in Microfinance (Ingird Matthaus-Maier, J.D. von Pischke, 2008)
• Microfinannce Institutions – Financial and Scoila Performance (Roy Mersland, R. Oystein Strom, 2014)
Preliminary scope of work in English
The idea of lending small loans to poor people, which consecutively led to the emergence of Microfinance sector, was invented by Mr. Muhammad Yunus in 70’s. The fundamental goal was to offer a capital to disadvantaged people, who couldn’t be served by regular banks due to their lack of collateral. Since then the number of Microfinance Institutions (MFIs) grew rapidly. This progress was associated with increasing variety of services delivered to borrowers, from specific-purpose loans to insurance.

During this enormous growth several issues have surfaced and became a subjects of large number of studies. One of the main concerns is the ongoing process of changes among Microfinance Institutions (MFIs) towards more professional and for-profit managed businesses, such as MFI’s which publicly offered their stocks.

Example of the challenges in this area is Andhar Pradesh crisis in 2011, which led to suicide wave caused by insolvency of SKS Microfinance bank’s borrowers, one of the largest MF banks. According to Washington Street Journal and other literature there are clues that the root-cause of this situation was SKS’s hugely successful IPO and investors driven hyper-growth period.

These issues indicate that some of the listed MFI’s can get under investors pressure to increase profitability leading to “mission drift” and the business long term sustainability risk. There are however very successful MFI’s IPO examples as well (e.g. Compartamos Banco IPO in 2007).

Motivation of my Master thesis is to get better understanding of listed MFIs around the world and attempt to answer the question whether MFIs equity is safe and convenient opportunity for investor’s portfolio diversification.
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