The Microfinance Collateralized Debt Obligation: A Modern Robin Hood?

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Abstract

The aim of this paper is to highlight a potentially very fruitful link between micro-entrepreneurs and international capital markets. It discusses the role structured finance and credit derivatives could play in extending finance to micro-entrepreneurs on a much larger scale than today's mainly non-commercial microfinance industry. The mechanisms of so-called collateralized debt obligations (CDOs) are described and extended to the microfinance world. Finally, it hypothetical, but realistic, example of such a microfinance CDO (MiCDO) is used to discuss the implications of securitization and tranching of microcredits. (C) 2008 Elsevier Ltd. All rights reserved.

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Subject classification (UKÄ) – MANDATORY

  • Economics

Keywords

  • commercial microfinance, structured finance, collateralized debt, MiCDO, obligation, Asia, China
Original languageEnglish
Pages (from-to)2109-2126
JournalWorld Development
Volume36
Issue number11
Publication statusPublished - 2008
Publication categoryResearch
Peer-reviewedYes