Impact of global economic meltdown on microfinance[1]:
+ Impacts:
- Influx of talent to the MFI space
- MFI concepts being validated:
- Groups vs. individual lending
- Small loans, frequent repayment
- High touch lending
- strong credit checks vs. blind reliance on collateral
- Possible establishment of credit bureaus
- Opportunity to attract funds looking for uncorrelated returns to other assets
- Impacts:
- Higher operating expenses due to inflation
- Increase in cost of borrowing and delay disbursements
- Banks demanding personal guaranties of CEOS and MFIs
- Poor borrowers are also hurt by inflation
Sources:
[1] Global Meltdown and Microfinance, Unitus Capital.
finco
December 19, 2008 at 12:47 AM
Article sums up most prominent effect of changes in global context on Microfinance.
To add some more to the list
+ves
-Penetration & wider customer base would help chanellizing funds reserved for SMEs and ventures throguh microfinance
-Lower cost of rating through federal initiatives as standardization and regulation
-Change in role from mircocredit conduit to granular approch for unsecured credit distribution
-Attractive alternative for cosumer credit with increase in spread on interbank credits
-Ves
Impact of meltdown on services industry hence on demand for microcredit
-Government regulation limiting means of access and distribution of funds