MFI Benchmark Analysis - Operating Efficiency: Victim to the Crisis?

As the world watched the financial crisis and ensuing economic slowdown unfold in developed economies in late 2008, observers of microfinance braced themselves for the fallout on microfinance institutions, some of which began to appear by the end of 2008. The exact causes and their contributory impacts will still take time to work out. How did rising food and fuel prices affect credit needs of poor households and their businesses? To what extent did changes in the financial markets impact MFI growth through greater pressure on MFI capital raising and refinancing needs? Would diminished household revenues from slower remittance flows and local economic slowdown put significant pressure on portfolio quality and lead to slowdown in credit growth? Whatever the combination of causes, stress signs appeared in microfinance institutional performance by the end of 2008, as growth rates slowed, profit margins tightened and, in some countries, portfolio quality deteriorated. These Highlights look at the major trends in institutional performance and explore the impact of slowed growth on operating costs. read more...