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Classifying MFIs: Microfinance Institution Tier Definitions

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MicroRate White Paper Cover- Microfinance Institution Tier Definitions

In this white paper, MicroRate addresses the industry’s need for an objective set of criteria to classify the maturity of a microfinance institution (“MFI”). Historically, the microfinance industry referenced a system of three or four “tiers” to differentiate between MFI types.  However, previous tier definitions – often vague or based only on one indicator such as size – failed to adequately capture an MFI’s level of institutional development.

The system proposed is based on a three-tier structure that applies three simple, objective indicators that, together, act as proxies for MFI maturity. The three indicators are sustainability (return on assets, RoA), size (total assets in U.S. dollars) and transparency (level of regulation/reporting).

The State of Microfinance Investment 2012: MicroRate’s 7th annual survey and analysis of MIVs

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In this report, The State of Microfinance Investment 2012: MicroRate’s 7th annual survey and analysis of MIVs, MicroRate finds that microfinance investment vehicles (MIVs) have settled into a lower level of growth.  The key findings of the report include:

  • MIV total asset growth settled into a “new normal” at 11% during 2011 (2010: 12%, 2012 forecast: 14%).
  • Record year for investor redemptions and fund maturities, however growth at existing and new funds resulted in a net inflow.
  • Latin America had the largest share of growth, but the pace of growth was faster in East Asia and the Pacific and Africa.
  • Continuing shift from debt to equity; increase in non-microfinance investment (e.g. housing, fair trade).
  • Institutional investors’ demands show increasing importance of financial performance.

PDF Read the report

PDF Read the press release

Study: Public Credit Registries, Credit Bureaus, and the Microfinance Sector in Latin America

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MicroRate Credit Bureau Report Cover

With the support of the IDB- FOMIN, CAF, and Calmeadow, MicroRate produced the study “Centrales de Riesgo Públicas y Burós de Crédito y el Sector Microfinanciero en América Latina” (“Public Credit Registries, Credit Bureaus, and the Microfinance Sector in Latin America”).  This report emphasizes how public credit registries and credit bureaus are critical tools for healthy growth in the microfinance sector.  The study concludes that these sources of credit information are even more important when there is risk of overindebtedness.  In the majority of the countries evaluated in this study, it would be relatively easy to improve the effectiveness of credit bureaus through changes to the legal framework and regulation.

PDFRead the report (in English)

PDFRead the report (in Spanish)

Microfinance Investment: A Primer

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In this white paper, “Microfinance Investment: A Primer,” Luminis, a service of MicroRate, provides investors with a brief introduction to microfinance and the microfinance investment industry.

This paper contains information on the total asset sizes of microfinance institutions and microfinance funds, the diversity of funds, as well as the important role that these funds play in providing capital to increase financial access globally.

Through this research, Luminis seeks to educate investors about microfinance investment options, promoting transparency and informed investment decisions

PDF Read Microfinance Investment: A Primer

The Tipping Point: Over-indebtedness and Investment in Microfinance

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The Tipping Point: Over-indebtedness and Investment in Microfinance
MicroRate and the Mix Market have just published “The Tipping Point” as part of the MicroBanking Bulletin series.

This study examines whether investment contributed to recent microfinance repayment crises, and whether measures of investment activity might serve as early warning signals for future microfinance crises.

PDF Read The Tipping Point- Over-Indebtedness and Investment in Microfinance

Role Reversal Revisited: Are Public Development Institutions Still Crowding Out Private Investment in Microfinance?

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In this report, Role Reversal Revisited: Are Public Development Institutions Still Crowding Our Private Investment in Microfinance?, finds that, yes, this crowding out is still occuring.  The original Role Reversal study, published in 2007, found that DFIs were crowding out private microfinance funds, by offering below-market interest rates and other incentives.  Five years later, Role Reversal Revisited concludes that the competition is even more pronounced.

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PDF Read the press release

The State of Microfinance Investment 2011

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The State of Microfinance Investment 2011
The State of Microfinance Investment 2011, surveys microfinance investment vehicles (MIVs) to highlight the trends and outlook for the industry. Based on interviews with executives of the major microfinance investment funds and a survey of the 100+ active MIVs, this report examines the key factors that affected the microfinance fund market in 2010 and the trends that are likely to drive growth in 2011 and beyond.

PDF Read the State of Microfinance Investment 2011

PDF Read the Press Release
PDF Read the previous edition: State of Microfinance Investment 2010, or earlier MIV Surveys

Role Reversal- Are Public Development Institutions Crowding Out Private Investment?

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Role Reversal- Are Public Development Institutions Crowding Out Private Investment?
Role Reversal- Are Public Development Institutions Crowding Out Private Investment? (2007)
The rapid growth of foreign private lending to microfinance institutions (MFIs) in the last several years has led to a surprising reversal of roles between government-owned development agencies and private lenders. Development institutions (International Financial Institutions -“IFIs”) are concentrating their loans in the strongest MFIs, leaving private lenders to look for opportunities among smaller, riskier borrowers.  Development institutions are “crowding” private lenders out of the best MFIs.

PDFRead Role Reversal

MFI Performance Technical Guide

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MFI Performance Technical Guide
The lack of universally understood indicators in microfinance led MicroRate to pioneer a set of indicators specific to the microfinance industry for the evaluations of MFIs.  MicroRate has organized this set of indicators into its Technical Guide, which is recognized industry-wide.

PDF View the Technical Guide

PDF View the Technical Guide (Spanish)

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MICROCAPITAL BRIEF: Nine Indian Impact Investment Companies Forming “Indian Impact Investor Council”
Nine companies that specialize in impact investment reportedly will be establishing the “Indian Impact Investor Council” (IIIC) to establish guidelines helping investment companies in India regulate themselves. These companies include Aavishkaar of India, which specializes in impact investments in rural initiatives; US-based Omidyar Network, which funds companies engaged in economic development initiatives; Elevar Equity, which [...]
Guatemala: Ecuatorianos absorben Banco de Antigua

Las acciones del Banco de Antigua, que lleva 15 años de operación en el mercado guatemalteco, fueron compradas en su totalidad por el grupo ecuatoriano Ribadeneira...

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