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Sovereign Wealth Funds and Long-Term Investing$
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Joseph Stiglitz, Patrick Bolton, and Frederic Samama

Print publication date: 2011

Print ISBN-13: 9780231158633

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231158633.001.0001

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Building Emerging Countries’ Financial Infrastructure by Investing in Microfinance

Building Emerging Countries’ Financial Infrastructure by Investing in Microfinance

Building Emerging Countries’ Financial Infrastructure by Investing in Microfinance
Sovereign Wealth Funds and Long-Term Investing

Arnaud Ventura

Columbia University Press

This chapter closes the panel discussion on socially responsible investment (SRI) by promoting microcredit in developing countries as a natural match for SRI investments by sovereign wealth funds (SWFs). The microfinance market includes three to four billion people worldwide who have no access to formal or traditional financial services in the twenty-first century, mainly in emerging countries. Of these three to four billion people, 500 million could use microcredit to develop their own business. The idea, therefore, is to build a retail financial infrastructure that will provide financial services to this marginalized group. There are two opportunities at the local retail level for funds interested in microfinance: the leading microfinance institutions that know most markets from Asia to Latin America to Africa; and leading microfinance institutions that can be invested in and that can be, with a long-term objective, brought to an exit on the local markets. At the global level, there are a number of microfinance investments: about 100 are based in the United States, Europe, and emerging markets, which can target specific private equity, fixed income, and different types of investment strategies.

Keywords:   sovereign wealth funds, SWF, social responsible investment, SRI, microcredit, microfinance, developing countries

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