4 ms·

I think you accidentally made my point. If the real returns to investment in impoverished regions are so high, why are those investments not being made? The f

• devdas 6y ago
  It's high risk, and institutional finance isn't available to poor people. Being poor is expensive.
• smabie 6y ago
  Microfinance is very hard to get right. It requires a lot of supervision, a large network of loan officers, and intricate structuring of the terms in order to align incentives. Moreover, the loans are capacity constrained, the risk is high, takes tons of work, a lot of local knowledge, etc. All in all, it's almost impossible for microfinance loans to work for the lender. As a charity, it works okay, but if you want to earn yield, forget about it. There's tons of really amazing opportunities in EM, but you can't exploit them by sitting at your desk. Or rather, those that can have probably already been exploited.
• newen 6y ago
  There should be a name for this kind of logical fallacy you're making. Like rational markets fallacy. You can't assume a market will always act rationally and freely in a simplistic manner. It's kind of like saying the taxi market is efficient, it cannot possibly be disrupted. Then Uber comes in and disrupts the market and then you say, the taxi market was inefficient and ripe for disruption. While the fact remains that all along it was inefficient. Bad example I know.