Pin It The question recurs frequently.
Share Banking and finance play an indispensable role within the capitalist economy by providing credit, liquidity and risk management services to individuals, businesses and governments.
While many may take banking services for granted, the need for bank finance is felt much stronger at the extremes of the economic spectrum. At one end are those involved in large investment projects, the success of which depends on having access to large amounts of capital; at the other end are those who are excluded from traditional banking services due to their precarious economic situations.
While both institutions provide similar services, the clients they serve and the incentives that motivate them are very different.
Investment Banking The activity of investment banks generally falls under the purview of three separate divisions: The Trading Division offers services regarding investments, financial intermediation and risk-management to institutional investors.
This division also conducts in-house research as well as non client-related investment activity.
Finally, the Asset Management Division oversees money-management activities for both individual clients and institutional investors. Investment banks are all about high volumeand their clients are generally high-net-worth individuals and institutional investors, such as pension funds or governments.
Yet, it was the excessively risky activities of these very banks that led to the crisis, leaving many frustrated and confused as to whether banks and financial markets are worth all the trouble and money.
Yunus believed that poor people, especially poor women, could benefit considerably from small loans. A March report by The World Bank confirms this belief. MFIs aim at financial inclusion by providing basic financial services to low-income people, helping them finance productive activity, save, smooth-out consumption and insure against the risk of unforeseen circumstances.
Although initially pioneered by social and charitable organizations with funds from development agencies or the savings of other low-income individuals, microfinance is now seen as having profitability potential.
CompartmentosBanco in Mexico, BancoSol in Bolivia and SKS in India, among other private microfinance companiesbelieve there are profits to be made from these arrangements. Some, including Yunus, are critical of these profit-seeking institutions, arguing that the incentive for providing microfinance should be poverty alleviation, not profit.
The fear is that while commercialized MFIs may be able to generate more funds by appealing to profit-seeking investors, they will have to charge higher interest rates that may create a debt trap for low-income borrowers.
The Bottom Line Investment banks and microfinance institutions are engaged in very similar activities: The difference between these two institutions, however, is the income classes they serve and the incentives that motivate them.
While microfinance serves the poor and investment banks the rich, the recent financial crisis and the economic ills that followed are evidence that the activities of investment banks affect more than their high net-worth clients.
Perhaps investment banks could learn a thing or two about social goals from microfinance and realign their priorities accordingly. Trading Center Want to learn how to invest? Get a free 10 week email series that will teach you how to start investing.
Delivered twice a week, straight to your inbox.Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Microfinance began in the s when social entrepreneurs began lending money.
Pakistan Microfinance Investment Company Limited (PMIC) is registered as an Investment Finance Company under NBFCs regulations with Securities and Exchange Commission of Pakistan (SECP).
Pakistan Microfinance Investment Company Limited (PMIC) is registered as an Investment Finance Company under NBFCs regulations with Securities and Exchange Commission of Pakistan. Microfinance investment company to be set up New entity would be given Rs3 billion as equity, with shareholders contributing another Rs3.l billion OUR CORRESPONDENT KARACHI With the help of foreign donors, the Pakistan Poverty Alleviation Fund (PPAF) is going to set up.
Cnr Hibiscus Ave & Mud Alley, Honiara Please note the Australian High Commission Chancery office is temporarily closed due to renovations. For Consular and other assistance, the Australian High Commission Annex office is located on the top floor of the BSP Building opposite Telekom central office.
Nov 18, · Catalyst Microfinance Investment Company is a private equity and venture capital firm specializing in start-up and growth capital investments. The firm seeks to invest through its fund. It Location: 19 Cybercity Ebene, Mauritius. Download-Theses Mercredi 10 juin