Investments that Make a Difference - A Study Examining Swedish Investors and Microfinance Investments
Background and research question: Microfinance has proven to be a valuable poverty alleviation method but in order to reach its full potential a lot of additional capital is needed. Over the past years we have witnessed an increasing extent of ethical consideration in the financial market and social responsible investments (SRI) have been a growing philosophy. Sweden is the fourth largest SRI market, but as oppose to international trends microfinance investments as a part of SRI has not yet been fully recognized among Swedish investors. To date, there are no known research papers that have examined the Swedish investors and their possibilities to invest in microfinance. Therefore, the research question of this study examines what potential microfinance investments have to become a social responsible investment for Swedish investors. Purpose: The thesis aims to show empirical evidence regarding the Swedish SRI and microfinance investment industry with specific concern to examine the potential of microfinance to become a social responsible investment, SRI, for Swedish investors. Delimitations: The study is limited to examine Swedish institutional investors that either currently are investing in microfinance or in other types of ethical, sustainable or social investments. Further, the study is only focusing on the investment needs in foreign MFIs in developing countries. Methodology: A qualitative research is used to investigate the research question. By collecting primary data through semi-structured telephone interviews and secondary data for the empirical findings, the potential for microfinance investments have been examined. Empirical results and conclusion: The empirical results showed that labelling microfinance investments as SRI might create unnecessary confusion. Consequently, the authors believe that microfinance investments should be examined without any specific categorisation in mind. After examining microfinance investments' opportunities and limitations, the authors came to the conclusion that the investments have a potential for the Swedish investors if the MFIs and Swedish investors manage the mentioned limitations and measures. The authors believe that the investments will have gained foothold on the Swedish market within five years. Suggestions for further research: Further research could focus on future microfinance initiatives that are essential in order to incorporate the potential of microfinance investments in Sweden. Further research could use also execute the research in another country with scarce microfinance investments, using the scope of this study.