The tremendous success of the Compartamos’ IPO has provoked debate and reflection about the commercial model of microfinance. The IPO Banco Compartamos received, gave it the advantageous access to capital markets for borrowing and raising additional equity. In other words, Banco Compartamos had capital to loan to their clients in a short period of time, rather than in a long period of time. In short, Compartamos might have reduced interest rates somewhat, but instead used profits to achieve unprecedented outreach and to position itself for even greater outreach in the future. The IPO showed the capital markets that doing business with the poor can be profitable, which opens the way for huge amounts of capital to move into the fight against …show more content…
In other words, I consider that village banking should adopt the idea of “big scale”, like Banco Compartamos, so their social impact would be maximized. Additionally, village banking could evolution to a for-profit bank, this way it would be financially sustainable, therefore the bank would not depend on other people’s generosity. However, in no way village banks should profit from the poor. The profit should not be taken from the poor in order for the poor to really escape poverty. Additionally, MFIs should highly encourage savings, since it is the pathway out of poverty. To be successful, MFIs must cut costs. But many of their expenses – which are passed along to users – are inevitable. In other words, MFIs should start using systems like MPeso, so they could cut back in expenses; and, consequently, have their interest rates