Microfinance at Credit Suisse: Linking the TOP with the BOP

Published 22 Feb 2010
Reference 5673
Industry Banking
Region Global
Summary

Microfinance investment opportunities have been well received by Credit 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 Credit 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 (base of the pyramid, the poor), but as microfinance comes under fierce criticism for over-indebting the poor, and with a decline in growth, performance and portfolio quality, Credit Suisse must consider its future engagement in this sector of the emerging markets.

Teaching 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 Credit Suisse to be involved in microfinance in a context of a booming, but increasingly uncertain industry; and (3) To decide whether and how Credit Suisse should extend its involvement in an uncertain field in a number of emerging markets.

Keywords
  • microfinance
  • banking
  • socially responsible investment (SRI)
  • microfinance fund
  • financial crisis
  • portfolio diversification
  • development
  • social responsibility and ethics
  • poor people
  • sustainability
  • Credit Suisse
  • investor
  • risk management
  • global financial crisis
  • emerging market
  • social entrepreneurship
  • RD0110
  • AR2010
  • AR0910