The Financial Crisis and Microfinance

As I was researching this for a client I realized, hey, why not post this so the next guy/gal that needs info on the crisis and microfinance has a one-stop shop. That is of course if they can find my blog.🙂

This will more than likely be a fluid document as my research will continue just as the crisis is poised to continue for much of this year. Stay tuned …

U.S.A.I.D.: “Will the Bottom of the Pyramid Hit Bottom” (2009)

 

This paper examines the main conduits of contagion of the financial crisis to the microfinance sector worldwide and assesses the impact that the crisis will have on the sector.

 

(Once you click on this link you will then have to download the file via another link inside)

http://www.microlinks.org/ev_en.php?ID=36865_201&ID2=DO_TOPIC

 

CGAP: “The Global Financial Crisis and Its Impact on Microfinance” (2009)

 

The report discusses the critical challenges microfinance faces and opportunities for development and institutional strengthening. 

 

http://www.cgap.org/gm/document-1.1.1305/FN_52%20ENG.pdf

 

 

MicroRate: “Cautious Resilience: The Impact of the Global Financial Crisis on Latin American & Caribbean Microfinance Institutions.” (2009)

 

The study combines data and interviews from 52 MFIs, 23 microfinance investment vehicles (MIVs) and MicroRate’s internal observations since the crisis began.

 

http://microrate.com/wp-content/uploads/2009/04/cautious_resilience.pdf

 

CGAP & J.P. Morgan: “Shedding Light on Equity Valuation: Past and Present” (2009)

 

A report that challenges conventional approaches to equity valuation in microfinance and establishes the first benchmarks for microfinance equity valuations. After a downturn in 2009, the report predicts that valuations will bounce back in 2010.

 

http://www.jpmorgan.com/cm/BlobServer/MFI_Research.pdf?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1158522500595&blobheader=application%2Fpd

Microfinance Insights: “Global Crisis and Microfinance: Tough Times Ahead” (2009)

 

This is a series of articles from Microfinance Insights March/April 2009 publication.

 

From Crisis to Catharsis: How Microfinance Can Make it through the Global Recession

https://www.microfinanceinsights.com/articles_new.asp?member=nonmembers&id=411

Risky Business: Can Rating Agencies do More to Protect MFIs During the Crisis?

https://www.microfinanceinsights.com/articles_new.asp?member=nonmembers&id=405

The Dangers of Leverage

https://www.microfinanceinsights.com/articles_new.asp?member=nonmembers&id=403

Locked in: Microfinance needs a radical change before it’s too late

https://www.microfinanceinsights.com/articles_new.asp?member=nonmembers&id=407

 

Wall Street Journal: “Mexico’s Microfinance Industry Undergoes Shake-Up On Crisis” (2009)

 

Article details Mexico’s microfinance industry and the crisis’ effects.

http://online.wsj.com/article/BT-CO-20090323-715455.html

 

The Economist: “Microfinance: Sub-par but not subprime” (2009)

 

Article reports lending to the poor has held up well but it is not as safe from the credit crisis as its champions hoped.

 

http://www.economist.com/finance/displaystory.cfm?story_id=13342261

Tufts University – The Fletcher School: “The Future of Risk Management in Microfinance” (2008)

 

Paper looks at the similarities between the trajectory of the U.S. mortgage market and microfinance. Where critical safeguards were not in play with the mortgage market, the paper makes the case for microfinance to preserve its homegrown, unique paradigms for managing risk. 

 

http://fletcher.tufts.edu/ceme/pdfs/OW_MFPaper_FINAL_06-30-08.pdf

 

 

Standard and Poors: “Microfinance Institutions: Changing Strategies for Changing Times” (2008)

 

The paper discusses a reevaluation of MF growth objectives, rethinking risk appetites, the inflationary toll, rising competition, and regulation in the face of crisis.

 

http://www2.standardandpoors.com/spf/pdf/media/SP_Microfinance_Institutions_Changing_Strategies_11_6_08.pdf

 

Microcredit Summit E-News: “Addressing the global financial crisis and fluctuating food and fuel costs” (2008)

The Microcredit Summit Campaign asked MF leaders from Asia, Africa and Latin America as well as investors to respond to a series of questions on the global financial crisis and fluctuating food and fuel costs.

http://www.microcreditsummit.org/enews/2008-10_all.html

 

African Development Bank: “The Current Financial Crisis: Implications for Private Sector Operations” (2008)

 

This paper provides an analysis of the effects the financial crisis has had on private sector operations in Africa and what banks can do to reduce the impact and avoid losing much of the growth momentum that has developed over the past decade.

 

http://www.dgroups.org/groups/worldbank/MicrofinanceFinancialCrisis/docs/Implications_for_Private_Sector_Operations_-_BN_3.pdf?ois=no

 

 

African Development Bank: “The Current Financial Crisis: Impact on African Economies (2008)

 

The document poses strategic steps on now to minimize the impact of the current crisis on the continent of Africa as a whole.

 

http://www.dgroups.org/groups/worldbank/MicrofinanceFinancialCrisis/docs/Impact_of_Financial_Crisis_on_African_Economies_-_BN_1.pdf?ois=no

 

 

World Bank: “Banks: Market Cap” (2008)

 

One page snapshot of the world’s major banks’ market value in the second quarter of 2007 and October 2008.

 

http://www.dgroups.org/groups/worldbank/MicrofinanceFinancialCrisis/docs/Banks_Bubble_Chart.pdf?ois=no

 

 

 

Standard and Poors: “Market Perspective: Microfinance Institutions Reevaluate their Growth Objectives Amid Global Turbulence” (2008)

 

Responses from microfinance market participants and investors to plans on how to cope with the credit crunch as well as their insights on risk management, inflation, competition, and regulation. 

 

http://www2.standardandpoors.com/spf/pdf/media/SP_Mkt_PerspectiveInstitutions_Reevaluate_Their_Growth_11_6_08.pdf

 

Historical Country(s) Specific Papers

 

IADB: “Tough Enough: Microfinance Defies Recession” (2007)

 

Discusses MFI survival techniques during tough financial times referencing various country examples from Latin America and Southeast Asia.

 

http://grupobid.org/news/detail.cfm?language=English&id=4335

 

 

IADB: “Facing the Music: How to Survive in the Midst of Crisis” (2007)

 

Adaptation models that Latin American MFIs have taken in the midst of crisis.

 

http://www.iadb.org/news/detail.cfm?language=English&id=4302

 

 

Banking with the Poor Network: “Effects on Microfinance of the 1997-1998 Asian Financial Crisis” (1998)

 

The document examines survey data from 9 Southeast Asian countries and the effects on microfinance during the Asian Crisis.

 

http://www.bwtp.org/publications/pub/effects_on_microfinance.pdf

 

 

World Bank: “Social Safety Nets in Response to Crisis: Lessons and Guidelines from Asia and Latin America (2001)

 

The paper looks at social policy responses to Asian and Latin American countries during economic crises. There is a section specifically dedicated to policy responses to recent crises (90s) in Indonesia, South Korea, Thailand, Mexico, and Peru.

 

http://siteresources.worldbank.org/SAFETYNETSANDTRANSFERS/Resources/APECEnglish.pdf

 

Bank Rakyat Indonesia: “The East Asian Crisis and Microfinance – The Experience of Bank Rakyat Indonesia (2000)

This analyzes the effect of the East Asian crisis on the Indonesian microfinance sector, with a focus on the experience of the Bank Rakyat Indonesia (BRI).

http://www.microfinancegateway.org/files/21294_25.pdf

 

ACCION: “Crisis in Bolivian Microfinance (2001)

The paper looks at the reasons for the downfall of the Bolivian microfinance industry (competition; crisis 1999-2000; debtors’ revolt) and suggests ways in which microfinance could learn from this experience

http://www.microfinancegateway.org/files/26272_file_Crisis_in_Bolivian_Microfinance.pdf

 

 

University of Cologne – Development Research Center: “Enhancing the Resilience of Microfinance Institutions and Programs: Lessons Learned from the Asian Financial Crisis” (2000)

The paper examines how MFIs are able to weather macroeconomic financial crises, with a specific focus on the Asian financial crisis and conclusions with regard to Indonesia.

http://www.microfinancegateway.org/files/29695_file_Enhancing_the_Resilience_of_Microfinance_Institutions_and_Programs.pdf

 

 

Managing Crisis Papers

 

 

IFC: “Solution for Hedging Foreign Exchange Risk in Microfinance Investments: The Case for a Private Sector-Philanthropic Community Partnership” (2007)

 

The document discusses the risk to MFI investments posed by foreign currency fluctuations and various alternatives to manage this risk.

 

http://www.ifc.org/ifcext/essaycompetition.nsf/AttachmentsByTitle/Silver_essay_Hedging_Forex_Risk/$FILE/Silver_Hedging+Forex+Risk.pdf

 

 

IADB: “How Should Microfinance Institutions Best Fund Themselves” (2006)

 

Referencing a study of 61 regulated MFIs in 9 Latin American countries, the paper looks at the advantages and disadvantages of four major funding sources to MFIs: deposits, borrowings, and stock and bond issue.

 

http://www.iadb.org/sds/doc/intD4C.PDF

 

 

CGAP: “How strong are MFIs in terms of their leverage and capital position?” (2007)

 

The graphs on this page attempt to answer the following questions:

 

1) How strong are MFIs in terms of their leverage and capital position?

2) How dependent are MFIs on commercial borrowing and as a result, exposed to fluctuations in availability of commercial capital?

3) How dependent on deposits are MFIs? (How exposed are MFIs to deposit runs or buffered against the decreasing availability of other sources of capital?)

4) How exposed are MFIs to currency fluctuations?

 

http://www.cgap.org/p/site/c/template.rc/1.11.12051

 

DAI: “Field Manual – Supporting Microfinance through Grants in Post-Crisis Settings” (2007)

Guide for program managers on supporting MFIs through small, short-term grants, in countries recovering from conflict or natural disaster.

http://www.microfinancegateway.org/files/44668_file_Field_Guide_FINAL.pdf

 

 

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