Chapter | Business Solutions for the Global Poor: Creating Social and Economic Value | 2007

Microfinance: Business, Profitability, and the Creation of Social Value

by Michael Chu

Abstract

The chapter examines the development of microfinance from its NGO origins to the present stage in which it is characterized by regulated commercial institutions capable of superior financial returns. It then looks at the creation of social value under these circumstances, advancing a role for profit in the generation of social value. In the process, it sets forth the conditions under which profit is positive and when it is negative from a societal perspective, and why business at the base of the pyramid may matter.

Keywords: Microfinance; Investment Return; Profit; Governing Rules, Regulations, and Reforms; Social Enterprise; Non-Governmental Organizations; Perspective; Value Creation;

Citation:

Chu, Michael. "Microfinance: Business, Profitability, and the Creation of Social Value." Chap. 28 in Business Solutions for the Global Poor: Creating Social and Economic Value, by V. Kasturi Rangan, John A. Quelch, Gustavo Herrero, and Brooke Barton, 309–320. John Wiley & Sons, 2007.