Microfinance Banana Skins 2014: The CSFI Survey of Microfinance Risk

Paper
Date Published: 
Jul 2014
Author: 
Lascelles, D., Mendelson, S. & Rozas, D.

Chronicling the risks in the microfinance industry

This report, the fifth release in a series, describes risks facing the microfinance industry as seen by an international sample of practitioners, investors, regulators, and observers. This survey was conducted in January and February 2014 and is based on 306 responses from 70 countries. It assesses two classes of risks: those that microfinance has faced for some years such as quality of management, governance, funding, credit, and newer risks associated with its evolution, structure, product design, and technological innovation. The following sections are covered in detail:

  • Risk of overindebtedness: the largest risk facing the industry;
  • Correlation between the different types of risks to establish connections between various risks;
  • Risk baskets involving grouping of risks with other risks having similar characteristics and assigning risk scores to each basket;
  • Responses of players in the industry as to their concerns about microfinance;
  • Ranking of the different risks according to whether respondents were service providers, investors, observers, support providers, raters, or regulators;
  • Ranking of the different risks according to geographical location of the respondents;
  • Evolution of microfinance over time with a focus on important changes;
  • Summarization of 19 different types of risks and assigning conclusive ranks and risk scores to each type.
Type: 
Paper