My collaboration with Planet Rating has just yielded its first publication: the Microfinance Index of Market Outreach and Saturation (MIMOSA). Here’s an excerpt from the introduction:
Outreach. Competition. Access. Over-indebtedness. Hardly any discussion of microfinance goes by without hearing one or more of these words. At heart, they are different facets of the same question: what is the potential market for loans from Microfinance Institutions (MFIs) in a given country?
This is a question that has not yet been fully answered, nor is this the first attempt at answering it. Perhaps the best-done study thus far was a recent paper by a team at the University of Zurich, and there are several others that preceded it. However, none of these studies have been able to propose a methodology that would simultaneously be simple to use, show reasonably accurate results, and be easily applied to nearly all developing countries. That is the objective we have set for MIMOSA.
The release in April 2012 of the Global Findex database, created by the World Bank, provides a unique opportunity to accomplish this. The Global Findex is a dataset on the use of formal and informal financial services (bank accounts, savings, credit, payments, etc.), based on surveys of at least 1,000 individuals in each of the 148 countries covered, all conducted in 2011. Both the initial analysis by the survey authors, as well as most of the subsequent analysis of this extraordinary dataset has focused on the question of insufficient access to financial services. This paper zooms in on one component of financial access – credit – and asks the opposite question: when is there too much access?
Read the full study here.
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