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The Microfinance Collateralized Debt Obligation: A Modern Robin Hood?

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  • Byström, Hans N.E.

Abstract

Summary The aim of this paper is to highlight a potentially very fruitful link between micro-entrepreneurs and international capital markets. It discusses the role structured finance and credit derivatives could play in extending finance to micro-entrepreneurs on a much larger scale than today's mainly non-commercial microfinance industry. The mechanisms of so-called collateralized debt obligations (CDOs) are described and extended to the microfinance world. Finally, a hypothetical, but realistic, example of such a microfinance CDO (MiCDO) is used to discuss the implications of securitization and tranching of microcredits.

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  • Byström, Hans N.E., 2008. "The Microfinance Collateralized Debt Obligation: A Modern Robin Hood?," World Development, Elsevier, vol. 36(11), pages 2109-2126, November.
    • Handle: RePEc:eee:wdevel:v:36:y:2008:i:11:p:2109-2126
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    Cited by:

    1. Dorfleitner, Gregor & Röhe, Michaela & Renier, Noémie, 2017. "The access of microfinance institutions to debt capital: An empirical investigation of microfinance investment vehicles," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 1-15.
    2. Andreas Pfingsten, 2009. "Das Sub-Prime-Virus: Ursachen und Folgen der Finanzkrise," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 14-24.
    3. Eva Terberger, 2009. "Subprime-Krise, strukturierte Finanzierung und die Förderung der Mikrokreditvergabe," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 78(1), pages 40-55.
    4. Kirchstein, Katja & Welvers, Kathleen, 2010. "Will microfinance continue to evolve into a mainstream asset class? Indications in favor and against," Proceedings of the German Development Economics Conference, Hannover 2010 36, Verein für Socialpolitik, Research Committee Development Economics.
    5. Tzu-Kuan Chiu, 2017. "Factors Influencing Microfinance Engagements by Formal Financial Institutions," Journal of Business Ethics, Springer, vol. 143(3), pages 565-587, July.
    6. Byström, Hans, 2007. "Structured Microfinance in China," Working Papers 2007:18, Lund University, Department of Economics.
    7. Dorfleitner, G. & Priberny, C., 2013. "A quantitative model for structured microfinance," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(1), pages 12-22.
    8. Karel Janda & Barbora Svarovska, 2012. "Suitability of Microfinance as an Investment Option," CERGE-EI Working Papers wp470, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    9. Mader, Philip, 2011. "Making the poor pay for public goods via microfinance: Economic and political pitfalls in the case of water and sanitation," MPIfG Discussion Paper 11/14, Max Planck Institute for the Study of Societies.
    10. Philip Mader, 2011. "Attempting the Production of Public Goods through Microfinance," Journal of Infrastructure Development, India Development Foundation, vol. 3(2), pages 153-170, December.
    11. Dorfleitner, Gregor & Oswald, Eva-Maria & Röhe, Michaela, 2020. "The access of microfinance institutions to financing via the worldwide crowd," The Quarterly Review of Economics and Finance, Elsevier, vol. 75(C), pages 133-146.

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    More about this item

    Keywords

    commercial microfinance structured finance collateralized debt obligation MiCDO Asia China;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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