Markets in Human Hope @ Darden
   Saras Sarasvathy  |  Veronica Cacdac Warnock |  Frank Warnock

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Markets in Human Hope (MHH) arose out of our desire to develop solutions for some curious puzzles that separate business from social issues in emerging economies as well as advance economies. For example:

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  Why is it that we invest in for-profit ventures, but donate to nonprofits, often in the same industry such as health insurance or education?
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  Why can’t we buy shares in Transparency International and sell it in open markets when we need our money back?
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  Why is it profitable to invest in cures for diseases but not in cures for poverty or illiteracy?
§  For most ventures, is profit the objective or a constraint?  Which should it be?

Markets in Human Hope seeks to build on innovations that use business and markets as viable tools in transforming societies.

THIS IS A YEAR-LONG GROUP INCUBATOR COURSE.

IN 2013-2014, WE WILL MEET IN Q1 EARLY WEEK 4:30-5:55pm. IN Q2 AND Q3 WE WILL MEET  ON AN AD HOC ONE-ON-ONE BASIS (roughly every other week, at mutually convenient times). IN Q4 THE PROFESSORS ARE AVAILABLE FOR CONSULTATION, BUT THERE ARE NO FORMAL CLASS MEETINGS.

In the year-long MHH 'Group Incubator' course ( the old 2012-13 syllabus), co-led by Saras Sarasvathy, Veronica Cacdac Warnock and Frank Warnock, students seek to build audacious innovations that use business and markets as viable tools in promoting human development and transforming societies. The challenge that we take on is to create products, services, business methods, organizational forms, financial instruments or market-based mechanisms that address some of the pressing issues in economic development and social well-being, especially those that demand structural changes.

Potential projects include investigating the feasibility of constructing financial markets for firms in the social sector; employing best practices such as credit scoring systems that facilitate and expand lending in the microfinance sector; designing and developing new metrics, new financial instruments, new industry standards and new organizational forms; and studying how to leverage, scale up and grow entrepreneurial drivers of new markets in the social sector.

The MHH RESEARCH agenda is aimed at creating or enabling MHH projects. For example, one goal is to create financial markets where they currently do not exist. Related to that goal, MHH research can be on products and institutional infrastructure that enable markets such as mortgage and other types of debt and equity markets in developing countries, stock exchanges in the social sector, futures markets in economic development, innovative funding instruments for disaster relief and human rights issues, and angel and venture capital markets in the citizen sector. The markets will in a financially sustainable way fund entrepreneurial initiatives in a variety of industries and sectors that will redefine the business landscape.

MHH Research Projects

          Video on MHH

See Batten Bulletin article on Saras' work. And www.effectuation.org.

Mobile Banking for the Underbanked in Pakistan and Bangladesh
This project with ShoreBank International, Gates Foundation, bKash, and UBL Omni seeks to expand mobile banking services to the underserved. See also http://bankingbeyondbranches.com/

Scoring the Unscored: Credit Scoring for Housing Micro Lenders

While Markets and Housing Finance concentrated on mortgage markets (that is, collateralized home loans), a large portion of the world's population cannot access such a loan. Instead, they are served by housing micro lenders (HMLs) who specialize in smaller, non-collateralized home loans. Can HMLs be profitable and sustainable? In this current project Veronica Cacdac Warnock and Frank Warnock are partnering with Development Innovations Group, FinMark Trust, and many lenders and government entities in South Africa to explore whether a non-standard credit scoring system can improve the risk assessment (and, by extension, profitability) of housing micro lenders.

Short Description of Project: Why Credit Scoring for Housing Micro Lenders? in Access Housing 2007 No. 7 pgs. 6-7 (FinMark Trust).

The State of Financial Development Around the World

Warnock, V., and F. Warnock, 2008. Markets and Housing Finance. Journal of Housing Economics 17: 239-251. This study of mortgage markets in 62 countries highlights the important role of (among other things) deep credit information systems in the development of housing finance systems. An update is our 2012 Developing Housing Finance Systems, written for the Reserve Bank of Australia and Bank for International Settlements.

Burger, J., and F. Warnock, 2006. Local Currency Bond Markets. IMF Staff Papers 53: 115-132. Featured in the IFC Sustainable Investor and Interest Bearing Notes. This study of bond markets in over 40 countries show that there is no quick way to develop a deep bond market. It takes a commitment to stable macroeconomic policies and an adherence to the rule of law (and laws that protect creditors, in particular). An update is Burger, J., F. Warnock, and V. Warnock, 2012. Emerging local currency bond markets. Financial Analysts Journal 68(4): 73-93.

Enabling the Development of Housing Finance Systems in Latin America: Housing Finance in Latin America and the Caribbean: What is holding it back?