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Authors:
Published by:
Stanford Business School (2008)
Version:
20 October 2008
Length:
3 pages
Data source:
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Abstract

Banco Compartamos was formed in 1990 as a non-governmental organization to aid the poor in rural areas of Chiapas and Oaxaca, Mexico by providing microloans. In 2001 Carlos Danel and Carlos Labarthe took the organization private and then in 2007 took Compartamos public in an initial public offering valued at $1.53 billion. Compartamos executives received $150 million of the $450 million in proceeds. Banco Compartamos became one of Mexico''s most successful banks, with an average return on equity of 40 percent since becoming for-profit. Critics, however, charged that Compartamos managed its business to benefit its investors, not its borrowers and did a disservice to the world of microfinance. This case briefly explores Banco Compartamos and microfinance approaches.

Topics

Microfinance; Social entrepreneurship; Non-governmental organizations; Bank loans; Interest rates; Poverty; Mexico; Ethics
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