Press Room

The Microfinance Information Exchange has just released a new paper from Lead Researcher Adrián González which investigates the relevance of a strictly growth-centered analysis for understanding microfinance institution (MFI) portfolio quality.

Data Brief No. 5: Is Microfinance Growing too Fast? provides analysis based on data from 821 MFIs that reported to MIX Market on the period from 2000 to 2008. This analysis yields three important findings to our understanding of growth and portfolio quality:

• Evidence indicates that there is little relationship between high growth rates and portfolio quality except in extreme situations;
• Results suggest that in terms of deterioration of portfolio quality, MFIs have more room to grow expansively (by adding more branches) than to grow locally (by adding more borrowers per branch);
• Country context, including high levels of penetration rates (over 10 percent of total population) and high aggregate country growth levels in number of microfinance borrowers (over 63 percent per year), is also associated with deterioration of portfolio quality.

Data Brief No. 5 and its accompanying dataset are both available on the MIX website in English, and a copy of González’s research presentation at the Inter-American Development Bank can be downloaded in Spanish here.