1. For Profit vs. Non Profit Microfinance; How are the poor affected? Brian R. Weinberg College of Arts and Sciences Spanish Department, College of Business Administration FIREL Department, and Honors College Mentor: Dr. Gloria Cox - Dean of the Honors College Mentor: Dr. Michael McPherson - College of Arts and Sciences Economics Department

2. Understanding Poverty  “2.8 billion of the world’s 6 billion people live on less than $2 per day.  1.2 billion live on less than $1 per day (Anon. 2000/2001,3).”  The Global Village

8. What is Microfinance?  “Microfinance is banking to the poor (Dr. Muhammad Yunus).”  “Microfinance is the supply of loans, savings, and other financial services to the poor (Kiva).”  97% repayment rate 2006 Nobel Peace Prize recipient Dr. Muhammad Yunus

9. Two Approaches of Microfinance  For Profit Approach  Higher interest rates to meet costs (up to 50%)  Stand alone entity (can raise capital easier to reach more people)  No research that says people cannot pay these rates (mission drift)  Non Profit Approach  Lower interest rates (20%)  Offer more services than credit (education, health)  Tendency to be dependent on donors

10. Signing for a Microfinance loan

11. My theory and hypothesis  Much research is done on determining which method is better. Both approaches are effective within their own scope and setting.  What are the advantages and disadvantages between the two approaches?  How are the poor affected with each approach?

12. Thesis Methodology  Create 2 case studies of each microfinance approach using institutions within Mexico (Compartamos & AlSol). Isolate as many variables as possible (age, size, average loan, number of borrowers, country).  Compare and Contrast these case studies in order to draw conclusions.

13. How will I collect my data?  Industry leader interviews  Institution website  Existing research  Annual reports  Personal visit to Mexico

14. Plans for the future  Meet with my mentors to discuss drafts.  Scholars Day Presentation (April 3, 2008).  Complete thesis by April 15, 2008.

15. Acknowledgements  Dr. Susan Eve, Associate Dean of Honors College  Dr. Gloria Cox, Mentor/Dean of Honors College  Dr. McPherson College of Arts and Sciences Economics Department  HNRS Thesis Proposal 3500 class!

16. References “Attacking Poverty: Opportunity, Empowerment, & Security.” World Bank’s World Development Report (2000/2001): 1-12. http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/0,,contentMDK:20194762~pagePK:148956~piPK:21 6618~theSitePK:336992,00.html (accessed October 12, 2007). http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/0,,contentMDK:20194762~pagePK:148956~piPK:21 6618~theSitePK:336992,00.html Flynn, Patrice. “Microfinance: The Newest Financial Technology of the Washington Consensus.” Challenge 50:2 (Spring 2007): 110- 21. http://www.econlit/microfinance_washingtonconsensus.com (accessed September 18, 2007).http://www.econlit/microfinance_washingtonconsensus.com Hermes, Neils and Robert Lensink.“The Empirics of Micro-finance: What do we know?” The Economic Journal 117:517 (Spring 2007): F1-F9. http://dq4wu5nl3d.search.serialssolutions.com/?genre=article&isbn=&issn=00130133&title=Economic+Journal&volume=11 7&issue=517&date=20070201&atitle=The+Empirics+of+Microfinance%3a+What+Do+We+Know%3f&aulast=Hermes%2 c+Niels&spage=F1&sid=EBSCO:EconLit&pid= Hermes%2c+Niels 0913382 2007020 1 EconLit</db (accessed September 18, 2007). http://dq4wu5nl3d.search.serialssolutions.com/?genre=article&isbn=&issn=00130133&title=Economic+Journal&volume=11 7&issue=517&date=20070201&atitle=The+Empirics+of+Microfinance%3a+What+Do+We+Know%3f&aulast=Hermes%2 c+Niels&spage=F1&sid=EBSCO:EconLit&pid= Hermes%2c+Niels 0913382 2007020 1 EconLit</db Kiva Organization Web site. http://www.kiva.org/.http://www.kiva.org/ Murdoch, Jonathan. “The Microfinance Promise.” Journal of Economic Literature 37 ( December 1999): 1569-1614. Murdoch, Jonathan. “The Microfinance Schism.” World Development 28 (2000): 617-629. The Chiapas Project Web site. http://www.chiapas-project.org http://www.chiapas-project.org Yunus, Muhammad. Banker to the Poor. New York, NY: PublicAffairs, 2003.