Banco Adaptamos Case

Banco Compartamos Case Study

Social innovation and enterprise is one way of eradicating poverty and illiteracy in society. The model that an enterprise takes determines their social impact in the long run. While some organizations maintain their social values over time, others abandon or diminish those values and venture into more financially profitable activities (Yunus 205). The paper addresses how the micro-finance business model used by Compartamos Bank compares with the village bank model of Grameen Bank. Microfinance in this sense refers to the supply of small loans, insurance, savings, and basic financial services to poor people, who are often unable to access such in conventional banking institutions. It looks at the shift of Compartamos Bank to a commercial bank, impacts of the shift to its initial mandate, and the effectiveness of both models in poverty alleviation. When the need for
Commercialization of microfinance is seen as an opportunity to expand access of the poor to financial services. The high profit margins will attract more investment into microfinance, thereby availing more money to extend to people to help them out of poverty. Additionally, it is felt that if other microfinance players shift to commercialization, the profit maximizing behavior will further take advantage of the poor. This would worsen the existing gap between the rich and the poor, profiting the rich and sending the poor into more poverty. Initiatives of the past two decades to make businesses socially responsible will also have been a waste. Communities and socially-responsible investors may shy away from initiatives aimed at addressing serious social issues. Microfinance faces a danger of turning into how well investors are doing of how profitable microfinance institutions are instead of actively focusing on ending