Investment in Microfinance Equity: Risk, Return, and Diversification Benefits

Marie Brière () and Ariane Szafarz

No 11-050, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper draws a global picture of worldwide microfinance equity. Taking full advantage of daily quoted prices of microfinance stocks from their issuance, we construct microfinance country equity indices and an international global microfinance index. We analyze changes in these indices, assessed in reference to comparable indices for the financial sector and also to national indices. Our findings show that microfinance has been closely correlated with the financial sector since 2003. In terms of risk exposure, estimates of the Capital Asset Pricing Model demonstrate that microfinance shares exhibit higher market beta than those of conventional financial institutions and have equivalent currency exposure.

Keywords: Microfinance; portfolio management; equity; emerging markets. (search for similar items in EconPapers)
JEL-codes: G11 G15 G21 O16 (search for similar items in EconPapers)
Pages: 31 p.
Date: 2011-10
New Economics Papers: this item is included in nep-mfd
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Citations: View citations in EconPapers (2)

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