Microfinance Regulation and Market Development in Latin America

Abstract

The evolution and development of microfinance markets is conditioned by external factors such as macroeconomic variables, institutional country level, availability of conflict resolution mechanisms, informal sector features, and applicable regulation. A careful design of the latter aspect is needed because it can either be a tool for promotion (by facilitating and making flexible microfinance institutions activities) or a restriction to market development by setting unnecessary limits or requirements. Considering these ideas, this paper analyzes the relationship between regulatory frameworks for microfinance in 17 Latin American countries and the level of development and specific features in its corresponding microfinance markets.

Performance of Microfinance Institutions in Ethiopia: Integrating Financial and Social Metrics

“…Accordingly, 64% of the MFIs considered in this study are financially self-sufficient. The ROA and ROE are also sustainability/profitability measures indicating how well the MFI uses its assets to generate returns and how commercially viable it is, respectively (Rosenberg 2009;Daher and Saout 2015). The results demonstrate that each birr investment in the sector generates nearly 3.95 birr.…”

“…Explicitly, PCA reorients the multivariate data so that they can be summarized with relatively few "components" that capture the maximum possible information from the original outcome variables (Luzzi and Weber 2006). The selection of both outcome and explanatory variables used in this study was based on previous studies (Tsegaye 2009;Assefa et al 2013;Rosenberg 2009;Vanroose and D'Espallier 2013;Ahlin et al 2011;Cull et al 2007;Luzzi and Weber 2006). Accordingly, we used a total of six outcome indicators, namely, number of borrowers, number of depositors, total gross loan portfolio (GLP), returns on asset (ROA), returns on equity (ROE), and financial self-sufficiency (FSS) to estimate the social and financial performance metrics.…”

“…However, growth of average loan size does not necessarily mean that an MFI is suffering from mission drift. For example, as an MFI matures and growth slows, the average loan size of the same market will rise (Rosenberg 2009). Hence, over the course of time, successful MFIs will have clients who receive larger loans and will become less poor (Christen 2001).…”

“…On average, MFIs in Ethiopia have a GLP of 192 million Ethiopian birr. The FSS measures how well the MFI can cover its costs accounting for adjustments to operating revenues and expenses (Rosenberg 2009). Accordingly, 64% of the MFIs considered in this study are financially self-sufficient.…”

Microfinance Notes in the Context of Vietnam

“…There are several famous microfinance institutions in Latin America such as Oxfam, Accion, Finca, Prodem, and Banco Ademi, which provide microfinance services to the poor [16]. In particular, Accion is an international microfinance organization that operates in many countries, including Brazil, Bolivia and Peru [17].…”