Two billion people in this world live below the poverty line. The smallest amount of money can have a big impact. Loans of no more than a few dollars, so-called microloans, empower people in developing countries to provide for themselves and their families – people with an otherwise grim financial outlook, as they are excluded from the financial system and do not receive any money from banks because they lack financial collateral. Microfinance has long established itself as crucial in the fight against poverty. Leading public institutions such as the World Bank employ impact investing in order to achieve their global development goals. At the same time, an increasing number of institutional and private investors are eager to benefit from the attractive return and positive social impact. How and, perhaps more importantly, why does microfinance work? What factors are pertinent for potential investors? Based on their extensive experience with over 20 million micro borrowers, the authors, financial specialists themselves, have thoroughly explored this particular asset class.
