Opportunities in microfinance risk management

Janda, Karel and Zetek, Pavel (2013): Opportunities in microfinance risk management.

Abstract

This paper examines the main risk management opportunities and threats, which microfinance institutions (MFIs) are exposed to. Awareness and understanding of these indicators can make the evolution of microfinance more accurate and simultaneously can help to locate the microfinance market in the broader picture of economic development. Growing competition improves the current situation for borrowers, because it leads to acceptable interest rates policy and expansion of existing microfinance services. At the same time, intense competition may represent threats, if the rules of regulation and supervision are not properly set. In this regard, we believe that the future of microfinance will significantly depend on the linkage between MFIs and financial markets, especially in the light of access to an alternative source of funding, the possibility of securitization and other complementary services.

• Item Type: MPRA Paper
• Language: English
• Keywords: Microfinance; Microcredit; MFIs, Financial Crises
• Subjects: G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

[1] ASSEFA E., HERMES N., MEESTERS A. (2012): Competition and the Performance of Microfinance Institutions. Available at: http://dx.doi.org/10.2139/ssrn.20295 68

[2] BARTON S., BUSTO C., RODRIGUEZ CH. (2007): Client-Focused Technology Usage in Microfinance Institutions. United States Agency for International Development. Available at http://pdf.usaid.gov/pdf_docs/PNADN418.pdf

[3] CULL R.,DEMIRGÜÇ-KUNT A., MORDUCH J. (2008): Microfinance Meets the Market. World Bank Policy Research Working Paper Series. Available at SSRN: http://ssrn.com/abstract=1149133

[4] DOKULILOVA L., JANDA K., ZETEK P. (2009): Sustainability of microfinance institutions in financial crisis. MPRA Paper No. 17696. Available at http://mpra.ub.uni-muenchen.de/17696/1/MPRA_paper_17696.pdf

[5] GÄHWILER B., NÈGRE A. (2011): Trends in Cross-Border Funding. CGAP. Available at http://www.cgap.org/sites/default/files/CGAP-Brief-Trends-in-Cross-Border-Funding-Dec-2011.pdf

[6] HASSAN K. M., SANCHEZ B. (2009): Efficiency Analysis of Microfinance Institutions in Developing Countries. Networks Financial Institute Working Paper 2009-WP-12. Available at SSRN: http://ssrn.com/abstract=1492238

[7] HAQ M., SKULLY T. M., PATHAN S. (2009): Efficiency of Microfinance Institutions: A Data Envelopment Analysis. Asia-Pacific Financial Markets, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1405709

[8] HERMES N., LENSINK R., MEESTERS A. (2008): Outreach and Efficiency of Microfinance Institutions. Centre for International Banking, Insurance and Finance Working Paper.

[9] HERMES N., LENSINK R., MEESTERS A. (2009): Financial Development and the Efficiency of Microfinance Institutions. Available at http://ssrn.com/abstract=1396202

[10] JANDA K., SVÁROVSKÁ B. (2009): Investing into Microfinance Investment Funds. IES Working Paper: 32/2009. Available at http://ies.fsv.cuni.cz/default/file/download/id/12502

[11] KAZI M. H., LEONARD J. E. (2012): Microfinance, Poverty and Youth Unemployment of Nigeria. Volume 12 Issue 13 Versions 1.0, Global Journal of Human Social Science Sociology, Economics & Political Science. Available at https://globaljournals.org/GJHSS_Volume12/6-Microfinance-Poverty-and-Youth.pdf

[12] LYMAN T., LYTHGOE T., MILLER M., REILLE X., SANKARANARAYAN S. (2011): Credit Reporting at the Base of the Pyramid: Key Issues and Success Factors. FORUM 1. Washington, D.C.: CGAP and IFC.

[13] MAISCH F. P., SORIA A. T., WESTLEY G. D. (2006): How Should Microfinance Institutions Best Fund Themselves? Inter-American Development Bank. Available at http://www.iadb.org/document.cfm?id=1442202

[14] MAKSUDOVA N. (2010): Macroeconomics of Microfinance: How Do the Channels Work? Working Paper Series 423, (ISSN 1211-3298), CERGE-EI. Available at http://www.rug.nl/gsg/Research/Conferences/EUmicrofinconf2011/Papers/1A.Maksudova.pdf

[15] MCINTOSH C., WYDICK B. (2005): Competition and Microfinance. Journal of Development Economics Vol. 78, pp. 271- 298.

[16] NAWAZ A. (2010): Efficiency and Productivity of Microfinance: Incorporating the Role of Subsidies. CEB Working Paper N° 10/009, Solvay Brussels School of Economics and Management Centre Emile Bernheim. Available at https://dipot.ulb.ac.be/dspace/bitstream/2013/56753/1/RePEc_sol_wpaper_10-009.pdf

[17] SCHICKS J., ROSENBERG R. (2011): Too much Microcredit? A Survey of the Evidence on Over- Indebtedness”, CGAP Occasional Paper No. 19. Available at http://www.cgap.org/sites/default/files/CGAP-Occasional-Paper-Too-Much-Microcredit-A-Survey-of-the-Evidence-on-Overindebtedness-Sep-2011.pdf

[18] SRNEC K., DIVIŠOVÁ M., SVOBODOVÁ E. (2008): The Transformation process in microfinance institution. Agricultura Tropica et Subtropica Vol. 41 (2) 2008. Available at http://www.agriculturaits.czu.cz/pdf_files/vol_41_2_pdf/srnec-divisova.pdf

[19] UPADHYAYA S., MITCHELL E., REDDY S., SETH A. (2007): Whitepaper on Microfinance: Issues and Analysis. UDAI. Available at http://floatingsun.net/udai/files/KS-Report_1.pdf

[20] YUNUS M., GONZALEZ A. (2010): Analyzing Microcredit Interest Rates. MIX Data Brief No. 4, Microfinance Information Exchange. Available at http://www.themix.org/sites/default/files/MIX%20Data%20Brief%204%20-%20Analyzing%20Microcredit%20Interest%20Rates.pdf

[21] Microfinance Banana Skins 2011. The CSFI survey of microfinance risk. http://www.cgap.org/publications/microfinance-banana-skins-2011