Private financing of microcredit: The models and potential of United States socially responsible investment in international small enterprise credit (Ph.D. Dissertation)

This study evaluates the advantages and drawbacks of U.S. socially responsible community investment (SRCI) as a source of loan capital by microfinance institutions (MFIs), which offer loans to low-income entrepreneurs in developing countries. The study finds that SRCI capital offers an appropriate capital source to MFIs. This research examines nine SRCI debt mechanisms, which are compared to determine the benefits and limitations of each from the perspectives of U.S. investors and MFI borrowers. The Nicaraguan Community Development Loan Fund (NCDLF) is chosen as a case study to analyze SRCI sources and uses. SRCI helps MFIs transition to commercial rate credit and provides longer term capital to productive and agricultural enterprises, which are difficult to finance with shorter term, commercial rate capital. The study concludes that the benefits outweigh the limitations for both MFls and investors, and offers policy recommendations to encourage growth of SRCI investment international