Students at the Daniels College of Business are learning new lessons about responsible lending and impoverished communities thanks to the school’s Deutsche Bank Microfinance Class, which recently was cited in a Forbes.com article on the 10 most innovative business school classes in the U.S.
Students in the Daniels class work directly with managers from Deutsche Bank’s Global Commercial Microfinance Consortium to evaluate loan applications from microfinance institutions (MFIs). These MFIs borrow from Deutsche Bank’s $80 million fund and use the money to make small loans of as little as $50 to individuals and groups in rural villages.
“The idea of microfinance has been around a while, but we’re now finding that larger financial institutions are getting involved, in addition to not-for-profits,” says Professor Mac Clouse, who teaches the course with Daniels Professor and Dean Emeritus Bruce Hutton. “The idea is taking hold that you can earn a rate of return as well as provide benefits to the poor.”
The Daniels-Deutsche Bank partnership was established five years ago when Hutton was leading an interterm course to New York. The group met with the director of Deutsche Bank’s microfinance division. The director was so impressed with the DU students and their questions that he invited Hutton and the University of Denver to join as the bank’s only academic partner.
The students in the class receive a set of loan applications from MFIs. Following a set of criteria provided by Deutsche Bank, the students research the applying organizations, compiling information about the economic and political environment in the region; talking with people from the finance, human resources and IT side of the MFI; and examining past successes to determine their suitability to receive a loan.
After conducting initial research, the class then travels to the MFI’s location during spring break to conduct onsite due diligence. Student groups have traveled to Cambodia, Uganda and Kenya to meet with the MFIs and visit in the field with local borrowers.
“In Cambodia we traveled an hour and a half to a village to meet with a woman who had used her loan to buy a net to catch fish to feed her family and sell to different people in the village. Another had used the loan to buy seeds,” Clouse says.
“The students can see and hear from the borrowers that it really does make a difference to them,” he says. “They can see how microfinance can provide a real benefit to the poor of society — you can make a difference by approaching a problem from a business perspective.”
The class takes place in the last part of winter quarter, over spring break and into spring quarter. Students must apply to the class, and they are responsible for covering their own travel costs and a course fee.
Clouse says the course appeals to students who are interested in business from an international perspective. In the past, students have been drawn from the International MBA program, the Sturm College of Law and the Josef Korbel School of International Studies, as well as Daniels’ MBA and MSF programs.
“It’s an opportunity to combine lending and social entrepreneurship in a way that can change people’s lives,” he says.