Microfinance and social investment

Jonathan Conning, Jonathan Morduch

Research output: Contribution to journalArticlepeer-review


This review puts a corporate finance lens on microfinance. Microfinance aims to democratize global financial markets through new contracts, organizations, and technology. We explain the roles that government agencies and socially minded investors play in supporting the entry and expansion of private intermediaries in the sector, and we disentangle debates about competing social and commercial firm goals. We frame the analysis with theory that explains why microfinance institutions serving lower-income communities charge high interest rates, face high costs, monitor customers relatively intensively, and have limited ability to lever assets. The analysis blurs traditional dividing lines between nonprofits and for-profits and places focus on the relationship between target market, ownership rights, and access to external capital.

Original languageEnglish (US)
Pages (from-to)407-434
Number of pages28
JournalAnnual Review of Financial Economics
StatePublished - 2011


  • corporate governance
  • leverage
  • microcredit
  • prosocial behavior
  • social entrepreneurship

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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