According to current World Bank figures, 2.8 billion people are affected by poverty and live on less than two U.S. dollars a day. Of these, 500 million are economically active, trying to improve their income as so-called "micro entrepreneurs" and therefore with a need for loans and other financial services, so that they can run a business and ultimately achieve a long-term improvement of their poverty situation.

Capital for credits offered by microfinance institutions (MFIs) is currently raised via two external sources of funding:

• direct investments (e.g. subsidies and loans)
• indirect investments, so-called microfinance investment vehicles (MIVs)

Capital is now primarily raised in the form of direct investments by development institutions. Assuming that the 500 million very small enterprises require a credit of 500 U.S. dollars on average, the unfunded demand for credit would be approximately 250 billion U.S. dollars.

An obvious option would be to make increased use of the international capital markets to fund this demand for credit. However, in order to expand access to the capital market in the form of microfinance investment vehicles in the long term, an appropriate business environment must be maintained or created. Microfinance will only be interesting as an investment for the majority of investors if more information is made available on these products so that they can be compared with other investment opportunities.

Liechtenstein's contribution

Research
The research interest in the field of investment consists in the analysis of microfinance as an investment class. Specifically, the possibilities and limits of this new investment class are analyzed.