Capital is the building block of any business, and a key factor in launching and scaling businesses that can catalyze private sector development and economic growth in emerging economies. Small and Medium Enterprises (SMEs), in particular, play a significant role in such economies. The World Bank estimates that formal SMEs in emerging economies are responsible for about 60 percent of total employment and 40 percent of national income. Yet, both access to capital and the high cost of capital remain key challenges for SMEs. The International Financial Corporation (IFC) estimates that the credit-financing gap, the difference between the current supply of financing available to micro-, small-, and medium-sized (MSMEs) enterprises and their demand for financing, is close to a trillion dollars for formal SMEs in developing economies. The credit-financing gap represents market opportunity for financial institutions to develop profitable ways of serving these enterprises.


WDI’s Finance focus area identifies and implements ways for financial institutions to profitably lower the cost of capital available to SMEs in emerging economies. We conduct independent research and work with faculty and students at the University of Michigan’s Stephen M. Ross School of Business on projects designed to develop innovative mechanisms to lower the cost of capital.

For more information about our work and/or to seek partnership opportunities, email us.

Current Projects

Remittances as Information

WDI has developed a mechanism, Leveraging Remittances as Information (LRI), that uses remittances to increase access to finance for SMEs in emerging economies. Remittances provide both information about the SME borrower and collateral for the financial institution. We are currently working with a bank in Ethiopia to develop a proof of concept.


Click here to download the LRI Infographic
Click here to download the LRI Concept Note

SME-Focused Funds

In collaboration with faculty and students from the Ross School of Business and the University of Michigan Law School, as well as local partners in the country, WDI is exploring SME-focused investment funds in India and Ethiopia.



Programs & Projects

Knowledge Sharing

  • The Role of Business: Positive Lens vs. Profit Maximizing

    Knowledge Resource: Education/General Management, Scaling Impact

    November 2017

    Within the Ross School of Business, a debate took place a few years back that continues today regarding the role of business. It was sparked by discussion surrounding a “Positive” Pillar as a part of the school strategy. More of…
  • Multinational Firms, Labor Market Discrimination, and the Capture of Competitive Advantage by Exploiting the Social Divide

    Knowledge Resource: Economic Development/Growth, Finance/Microfinance


    The organizational theory of the multinational firm holds that foreignness is a liability, and specifically that lack of embeddedness in host-country social networks is a source of competitive disadvantage; meanwhile the literature on labor market discrimination suggests that exploiting the…
  • Cross-Border Reverse Mergers: Causes and Consequences

    Knowledge Resource: Finance/Microfinance


    We study non-U.S. companies that have used reverse mergers as a means to adopt U.S. corporate law (and sometimes U.S. securities law as well). Early adopters of cross-border reverse mergers and those firms that hired a Big Four auditor exhibited…
  • A Reexamination of Tunneling and Business Groups: New Data and New Methods

    Knowledge Resource: Finance/Microfinance


    One of the most rigorous methodologies in the corporate governance literature uses firms’ reactions to industry shocks to characterize the quality of governance. This methodology can produce the wrong answer unless one considers the ways firms compete. Because macro-level shocks…
  • Egalitarianism and international investment

    Knowledge Resource: Economic Development/Growth, Finance/Microfinance


    This study identifies how country differences on a key cultural dimension—egalitarianism—influence international investment flows. A society’s cultural orientation toward egalitarianism is manifested by intolerance for abuses of market and political power and a desire for protecting less powerful actors. We…
  • Labor Market Institutions and Global Strategic Adaptation: Evidence from Lincoln Electric

    Knowledge Resource: Economic Development/Growth, Finance/Microfinance


    Although one of the central questions in the global strategy field is how multinational firms successfully navigate multiple and often conflicting institutional environments, we know relatively little about the effect of conflicting labor market institutions on multinational firms’ strategic choice…
  • Can foreign firms bond themselves effectively by renting U.S. securities laws?

    Knowledge Resource: Finance/Microfinance


    The study tests the functional convergence hypothesis, which states that foreign firms can leapfrog their countries’ weak legal institutions by listing equities in New York and agreeing to follow U.S. securities law. Evidence shows that the SEC and minority shareholders…



Back to Top