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Microfinance at Credit Suisse: linking the Top with the BOP

Author: Hillion, Pierre ; Wee, Jean ; Rousset, OlivierINSEAD Area: FinancePublisher: Fontainebleau : INSEAD, 2010.Language: EnglishDescription: 19 p.Type of document: INSEAD CaseNote: Latest version available via https://publishing.insead.eduAbstract: Microfinance investment opportunities have been well received by Crédit Suisse clients seeking socially responsible investments. They provide a “double bottom line”: a positive financial return (despite the global financial crisis), and a social impact by offering first-time access to financial services to the poor. From $5 million in 2003, total assets under management in microfinance at Crédit Suisse reached $1 billion by 2009, and untapped demand is estimated at $300 billion. The firm has positioned itself as a link between the top of the wealth pyramid (its clients) and the BOP (bottom of the pyramid), but as microfinance comes under fierce criticism for over-indebting the poor, and with a decline in growth, performance and portfolio quality, Crédit Suisse must reconsider its future engagement in this sector of the emerging markets.Pedagogical Objectives: (1) To understand the concept and challenges of investing in an alternative asset class like microfinance; (2) To analyse the benefits and risks for a global financial institution like Crédit Suisse to be involved in microfinance in a context of a booming, but increasingly uncertain industry; and (3) To decide whether and how Crédit Suisse should extend its involvement in an uncertain field in a number of emerging markets.
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Latest version available via <a href=https://publishing.insead.edu>https://publishing.insead.edu</a>

Microfinance investment opportunities have been well received by Crédit Suisse clients seeking socially responsible investments. They provide a “double bottom line”: a positive financial return (despite the global financial crisis), and a social impact by offering first-time access to financial services to the poor. From $5 million in 2003, total assets under management in microfinance at Crédit Suisse reached $1 billion by 2009, and untapped demand is estimated at $300 billion. The firm has positioned itself as a link between the top of the wealth pyramid (its clients) and the BOP (bottom of the pyramid), but as microfinance comes under fierce criticism for over-indebting the poor, and with a decline in growth, performance and portfolio quality, Crédit Suisse must reconsider its future engagement in this sector of the emerging markets.

(1) To understand the concept and challenges of investing in an alternative asset class like microfinance; (2) To
analyse the benefits and risks for a global financial institution like Crédit Suisse to be involved in microfinance
in a context of a booming, but increasingly uncertain industry; and (3) To decide whether and how Crédit Suisse
should extend its involvement in an uncertain field in a number of emerging markets.

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