Microfinance and the Global Financial Crisis : A Call for BASEL
For many years, microfinance has been the poster child of governments, policymakers, and international organizations with the goal of lifting millions of people out of poverty. The notion that microfinance can pursue and achieve the intertwined goa...
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| Format: | Working Paper |
| Language: | English en_US |
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International Finance Corporation, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2014/01/24161049/microfinance-global-financial-crisis-call-basel http://hdl.handle.net/10986/21722 |
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okr-10986-21722 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO FINANCE ACCOUNTING ACCOUNTING STANDARDS ADVISORY SERVICES AFFILIATES AFFORDABILITY AMOUNT OF RISK ARREARS ASSET CLASS ASSET QUALITY AVAILABILITY OF CREDIT AVERAGE DEBT BALANCE SHEET BANK FOR INTERNATIONAL SETTLEMENTS BANKING LAWS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEMS BORROWING BORROWINGS CAPITAL ADEQUACY CAPITAL INFLOWS CAPITAL MARKET DEVELOPMENTS CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CASH FLOW CASH OUTFLOWS CENTRAL BANK CENTRAL BANK FACILITIES CENTRAL BANKS COLLATERAL COLLATERAL REGISTRIES CONSUMER LOANS CORPORATE GOVERNANCE CREDIT BUREAUS CREDIT DECISION CREDIT DEFAULTS CREDIT DISCIPLINE CREDIT EXPANSION CREDIT GROWTH CREDIT LINES CREDIT POLICIES CREDIT PORTFOLIOS CREDIT QUALITY CREDIT RELATIONSHIP CREDIT RISK CREDIT RISK MANAGEMENT CREDIT RISK MARKET CREDIT RISK · MARKET CREDIT SCORING CREDIT UNDERWRITING CRISIS COUNTRIES CURRENT ACCOUNT CURRENT ACCOUNT SURPLUSES DEBT DEBT TRANSACTIONS DEFAULTS DEPOSIT DEPOSIT TAKING INSTITUTION DEPOSITORS DEVELOPING COUNTRIES DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTION DEVELOPMENT FINANCE INSTITUTIONS DISBURSEMENTS DISCLOSURE REQUIREMENTS DIVERSIFICATION EDUCATION LOANS EMERGING MARKET EMERGING MARKET COUNTRIES EMPLOYMENT EQUITY CAPITAL EQUITY RETURN EQUITY VALUATIONS EXTERNAL AUDITORS EXTERNAL FUNDING FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTEGRATION FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL RISK FINANCIAL RISKS FINANCIAL SERVICES FINANCIAL STRENGTH FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN CURRENCY FOREIGN CURRENCY RISK FOREIGN EXCHANGE FORMAL ECONOMIES FRAUD FRAUD RISK FUNDING SOURCES GLOBAL ECONOMY GLOBAL MARKET GOVERNANCE ISSUES GOVERNANCE STANDARDS GROSS DOMESTIC PRODUCT HIGH INTEREST RATES HOLDING HOUSING INDEBTEDNESS INFLATION INFORMATION SHARING INSTALLMENTS INTEREST INCOME INTEREST PAYMENTS INTEREST RATE INTEREST RATE CAPS INTEREST RATE RISK INTEREST RATES INTERNAL AUDIT INTERNAL CONTROLS INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKET INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FINANCE INTERNATIONAL SETTLEMENTS INTERNATIONAL STANDARDS INVESTING INVESTMENT VEHICLE INVESTMENT VEHICLES LENDERS LENDING EXPOSURE LENDING PORTFOLIO LIABILITY LIQUID ASSETS LIQUIDITY LIQUIDITY CONSTRAINTS LIQUIDITY CRISIS LIQUIDITY MANAGEMENT LIQUIDITY POSITION LIQUIDITY PROBLEMS LIQUIDITY RISK LOAN LOAN OFFICERS LOAN PORTFOLIO LOAN PORTFOLIOS LOAN SIZES LOCAL CURRENCY LONG-TERM LOANS MACROECONOMIC CONDITIONS MARKET COMPETITION MARKET CONDITIONS MARKET ENVIRONMENT MARKET PARTICIPANTS MARKET PRACTICE MARKET PRICES MARKET RISK MARKET RISKS MARKET SHARE MATURITIES MATURITY MATURITY MISMATCH MFI MFIS MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MICROFINANCE PRACTITIONERS MICROFINANCE REGULATION MICROFINANCE SECTOR MICROFINANCE SECTORS MINIMUM CAPITAL REQUIREMENTS MORTGAGE MORTGAGE LOANS OPERATING EXPENSES OPERATIONAL RISK OPERATIONAL RISKS OWNERSHIP STRUCTURE PAYMENT OBLIGATIONS PORTFOLIO PORTFOLIO QUALITY PROFITABILITY RECESSIONS REGULATORY FRAMEWORK REMITTANCES REPAYMENT REPAYMENT CAPACITY RESERVES RETAIL BANKING RETURN RETURN ON ASSETS RETURN ON EQUITY RETURN ON INVESTMENT RETURNS RISK ASSESSMENTS RISK CONTROL RISK EXPOSURES RISK FACTORS RISK MANAGEMENT RISK MANAGEMENT SYSTEM RISK MANAGEMENT SYSTEMS RISK PROFILE SECURITIES SETTLEMENT SETTLEMENT RISK SHORT-TERM LENDING SUBSIDIARY SWAP SYSTEMIC RISK TRADE BALANCES TRADING TRANSACTION TURNOVER USE OF COLLATERAL VALUATION WRITE OFFS WRITEOFFS |
| spellingShingle |
ACCESS TO FINANCE ACCOUNTING ACCOUNTING STANDARDS ADVISORY SERVICES AFFILIATES AFFORDABILITY AMOUNT OF RISK ARREARS ASSET CLASS ASSET QUALITY AVAILABILITY OF CREDIT AVERAGE DEBT BALANCE SHEET BANK FOR INTERNATIONAL SETTLEMENTS BANKING LAWS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEMS BORROWING BORROWINGS CAPITAL ADEQUACY CAPITAL INFLOWS CAPITAL MARKET DEVELOPMENTS CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CASH FLOW CASH OUTFLOWS CENTRAL BANK CENTRAL BANK FACILITIES CENTRAL BANKS COLLATERAL COLLATERAL REGISTRIES CONSUMER LOANS CORPORATE GOVERNANCE CREDIT BUREAUS CREDIT DECISION CREDIT DEFAULTS CREDIT DISCIPLINE CREDIT EXPANSION CREDIT GROWTH CREDIT LINES CREDIT POLICIES CREDIT PORTFOLIOS CREDIT QUALITY CREDIT RELATIONSHIP CREDIT RISK CREDIT RISK MANAGEMENT CREDIT RISK MARKET CREDIT RISK · MARKET CREDIT SCORING CREDIT UNDERWRITING CRISIS COUNTRIES CURRENT ACCOUNT CURRENT ACCOUNT SURPLUSES DEBT DEBT TRANSACTIONS DEFAULTS DEPOSIT DEPOSIT TAKING INSTITUTION DEPOSITORS DEVELOPING COUNTRIES DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTION DEVELOPMENT FINANCE INSTITUTIONS DISBURSEMENTS DISCLOSURE REQUIREMENTS DIVERSIFICATION EDUCATION LOANS EMERGING MARKET EMERGING MARKET COUNTRIES EMPLOYMENT EQUITY CAPITAL EQUITY RETURN EQUITY VALUATIONS EXTERNAL AUDITORS EXTERNAL FUNDING FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTEGRATION FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL RISK FINANCIAL RISKS FINANCIAL SERVICES FINANCIAL STRENGTH FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN CURRENCY FOREIGN CURRENCY RISK FOREIGN EXCHANGE FORMAL ECONOMIES FRAUD FRAUD RISK FUNDING SOURCES GLOBAL ECONOMY GLOBAL MARKET GOVERNANCE ISSUES GOVERNANCE STANDARDS GROSS DOMESTIC PRODUCT HIGH INTEREST RATES HOLDING HOUSING INDEBTEDNESS INFLATION INFORMATION SHARING INSTALLMENTS INTEREST INCOME INTEREST PAYMENTS INTEREST RATE INTEREST RATE CAPS INTEREST RATE RISK INTEREST RATES INTERNAL AUDIT INTERNAL CONTROLS INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKET INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FINANCE INTERNATIONAL SETTLEMENTS INTERNATIONAL STANDARDS INVESTING INVESTMENT VEHICLE INVESTMENT VEHICLES LENDERS LENDING EXPOSURE LENDING PORTFOLIO LIABILITY LIQUID ASSETS LIQUIDITY LIQUIDITY CONSTRAINTS LIQUIDITY CRISIS LIQUIDITY MANAGEMENT LIQUIDITY POSITION LIQUIDITY PROBLEMS LIQUIDITY RISK LOAN LOAN OFFICERS LOAN PORTFOLIO LOAN PORTFOLIOS LOAN SIZES LOCAL CURRENCY LONG-TERM LOANS MACROECONOMIC CONDITIONS MARKET COMPETITION MARKET CONDITIONS MARKET ENVIRONMENT MARKET PARTICIPANTS MARKET PRACTICE MARKET PRICES MARKET RISK MARKET RISKS MARKET SHARE MATURITIES MATURITY MATURITY MISMATCH MFI MFIS MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MICROFINANCE PRACTITIONERS MICROFINANCE REGULATION MICROFINANCE SECTOR MICROFINANCE SECTORS MINIMUM CAPITAL REQUIREMENTS MORTGAGE MORTGAGE LOANS OPERATING EXPENSES OPERATIONAL RISK OPERATIONAL RISKS OWNERSHIP STRUCTURE PAYMENT OBLIGATIONS PORTFOLIO PORTFOLIO QUALITY PROFITABILITY RECESSIONS REGULATORY FRAMEWORK REMITTANCES REPAYMENT REPAYMENT CAPACITY RESERVES RETAIL BANKING RETURN RETURN ON ASSETS RETURN ON EQUITY RETURN ON INVESTMENT RETURNS RISK ASSESSMENTS RISK CONTROL RISK EXPOSURES RISK FACTORS RISK MANAGEMENT RISK MANAGEMENT SYSTEM RISK MANAGEMENT SYSTEMS RISK PROFILE SECURITIES SETTLEMENT SETTLEMENT RISK SHORT-TERM LENDING SUBSIDIARY SWAP SYSTEMIC RISK TRADE BALANCES TRADING TRANSACTION TURNOVER USE OF COLLATERAL VALUATION WRITE OFFS WRITEOFFS Kruiff, David Hartenstein, Stephan Microfinance and the Global Financial Crisis : A Call for BASEL |
| description |
For many years, microfinance has been
the poster child of governments, policymakers, and
international organizations with the goal of lifting
millions of people out of poverty. The notion that
microfinance can pursue and achieve the intertwined goals of
development and financial profitability without friction
predominated. This dual opportunity, combined with a huge
untapped market for financial services at the bottom of the
pyramid attracted large amounts of funding from
international capital markets, triggering unprecedented
levels of growth. Until the global financial crisis, the
sustainability of the resulting market growth had not been
significantly questioned. As the crisis unfolded during the
end of 2007, there seemed to be consensus among microfinance
practitioners, analysts, and other industry experts that
this crisis will be different. The microfinance industry
braced itself for anticipated liquidity crunches, increase
in costs of funds, and foreign exchange, as well as a sharp
rise in portfolio arrears. This paper will: review recent
publications that have drawn conclusions on the effects of
the global financial crisis based on empirical data
research; draw the conclusion that proper governance and
risk management systems are essential and can have avoided
many of the problems specific microfinance institutions
(MFIs) faced during the financial crisis; and highlight
Basel framework sections relevant to MFIs and demonstrate
how these can be applied to strengthen MFIs. |
| format |
Working Paper |
| author |
Kruiff, David Hartenstein, Stephan |
| author_facet |
Kruiff, David Hartenstein, Stephan |
| author_sort |
Kruiff, David |
| title |
Microfinance and the Global Financial Crisis : A Call for BASEL |
| title_short |
Microfinance and the Global Financial Crisis : A Call for BASEL |
| title_full |
Microfinance and the Global Financial Crisis : A Call for BASEL |
| title_fullStr |
Microfinance and the Global Financial Crisis : A Call for BASEL |
| title_full_unstemmed |
Microfinance and the Global Financial Crisis : A Call for BASEL |
| title_sort |
microfinance and the global financial crisis : a call for basel |
| publisher |
International Finance Corporation, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2014/01/24161049/microfinance-global-financial-crisis-call-basel http://hdl.handle.net/10986/21722 |
| _version_ |
1764449049626279936 |
| spelling |
okr-10986-217222021-04-23T14:04:04Z Microfinance and the Global Financial Crisis : A Call for BASEL Kruiff, David Hartenstein, Stephan ACCESS TO FINANCE ACCOUNTING ACCOUNTING STANDARDS ADVISORY SERVICES AFFILIATES AFFORDABILITY AMOUNT OF RISK ARREARS ASSET CLASS ASSET QUALITY AVAILABILITY OF CREDIT AVERAGE DEBT BALANCE SHEET BANK FOR INTERNATIONAL SETTLEMENTS BANKING LAWS BANKING SECTOR BANKING SUPERVISION BANKING SYSTEMS BORROWING BORROWINGS CAPITAL ADEQUACY CAPITAL INFLOWS CAPITAL MARKET DEVELOPMENTS CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CASH FLOW CASH OUTFLOWS CENTRAL BANK CENTRAL BANK FACILITIES CENTRAL BANKS COLLATERAL COLLATERAL REGISTRIES CONSUMER LOANS CORPORATE GOVERNANCE CREDIT BUREAUS CREDIT DECISION CREDIT DEFAULTS CREDIT DISCIPLINE CREDIT EXPANSION CREDIT GROWTH CREDIT LINES CREDIT POLICIES CREDIT PORTFOLIOS CREDIT QUALITY CREDIT RELATIONSHIP CREDIT RISK CREDIT RISK MANAGEMENT CREDIT RISK MARKET CREDIT RISK · MARKET CREDIT SCORING CREDIT UNDERWRITING CRISIS COUNTRIES CURRENT ACCOUNT CURRENT ACCOUNT SURPLUSES DEBT DEBT TRANSACTIONS DEFAULTS DEPOSIT DEPOSIT TAKING INSTITUTION DEPOSITORS DEVELOPING COUNTRIES DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTION DEVELOPMENT FINANCE INSTITUTIONS DISBURSEMENTS DISCLOSURE REQUIREMENTS DIVERSIFICATION EDUCATION LOANS EMERGING MARKET EMERGING MARKET COUNTRIES EMPLOYMENT EQUITY CAPITAL EQUITY RETURN EQUITY VALUATIONS EXTERNAL AUDITORS EXTERNAL FUNDING FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTEGRATION FINANCIAL INTERMEDIARIES FINANCIAL MARKETS FINANCIAL RISK FINANCIAL RISKS FINANCIAL SERVICES FINANCIAL STRENGTH FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN CURRENCY FOREIGN CURRENCY RISK FOREIGN EXCHANGE FORMAL ECONOMIES FRAUD FRAUD RISK FUNDING SOURCES GLOBAL ECONOMY GLOBAL MARKET GOVERNANCE ISSUES GOVERNANCE STANDARDS GROSS DOMESTIC PRODUCT HIGH INTEREST RATES HOLDING HOUSING INDEBTEDNESS INFLATION INFORMATION SHARING INSTALLMENTS INTEREST INCOME INTEREST PAYMENTS INTEREST RATE INTEREST RATE CAPS INTEREST RATE RISK INTEREST RATES INTERNAL AUDIT INTERNAL CONTROLS INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKET INTERNATIONAL CAPITAL MARKETS INTERNATIONAL FINANCE INTERNATIONAL SETTLEMENTS INTERNATIONAL STANDARDS INVESTING INVESTMENT VEHICLE INVESTMENT VEHICLES LENDERS LENDING EXPOSURE LENDING PORTFOLIO LIABILITY LIQUID ASSETS LIQUIDITY LIQUIDITY CONSTRAINTS LIQUIDITY CRISIS LIQUIDITY MANAGEMENT LIQUIDITY POSITION LIQUIDITY PROBLEMS LIQUIDITY RISK LOAN LOAN OFFICERS LOAN PORTFOLIO LOAN PORTFOLIOS LOAN SIZES LOCAL CURRENCY LONG-TERM LOANS MACROECONOMIC CONDITIONS MARKET COMPETITION MARKET CONDITIONS MARKET ENVIRONMENT MARKET PARTICIPANTS MARKET PRACTICE MARKET PRICES MARKET RISK MARKET RISKS MARKET SHARE MATURITIES MATURITY MATURITY MISMATCH MFI MFIS MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTION MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MICROFINANCE PRACTITIONERS MICROFINANCE REGULATION MICROFINANCE SECTOR MICROFINANCE SECTORS MINIMUM CAPITAL REQUIREMENTS MORTGAGE MORTGAGE LOANS OPERATING EXPENSES OPERATIONAL RISK OPERATIONAL RISKS OWNERSHIP STRUCTURE PAYMENT OBLIGATIONS PORTFOLIO PORTFOLIO QUALITY PROFITABILITY RECESSIONS REGULATORY FRAMEWORK REMITTANCES REPAYMENT REPAYMENT CAPACITY RESERVES RETAIL BANKING RETURN RETURN ON ASSETS RETURN ON EQUITY RETURN ON INVESTMENT RETURNS RISK ASSESSMENTS RISK CONTROL RISK EXPOSURES RISK FACTORS RISK MANAGEMENT RISK MANAGEMENT SYSTEM RISK MANAGEMENT SYSTEMS RISK PROFILE SECURITIES SETTLEMENT SETTLEMENT RISK SHORT-TERM LENDING SUBSIDIARY SWAP SYSTEMIC RISK TRADE BALANCES TRADING TRANSACTION TURNOVER USE OF COLLATERAL VALUATION WRITE OFFS WRITEOFFS For many years, microfinance has been the poster child of governments, policymakers, and international organizations with the goal of lifting millions of people out of poverty. The notion that microfinance can pursue and achieve the intertwined goals of development and financial profitability without friction predominated. This dual opportunity, combined with a huge untapped market for financial services at the bottom of the pyramid attracted large amounts of funding from international capital markets, triggering unprecedented levels of growth. Until the global financial crisis, the sustainability of the resulting market growth had not been significantly questioned. As the crisis unfolded during the end of 2007, there seemed to be consensus among microfinance practitioners, analysts, and other industry experts that this crisis will be different. The microfinance industry braced itself for anticipated liquidity crunches, increase in costs of funds, and foreign exchange, as well as a sharp rise in portfolio arrears. This paper will: review recent publications that have drawn conclusions on the effects of the global financial crisis based on empirical data research; draw the conclusion that proper governance and risk management systems are essential and can have avoided many of the problems specific microfinance institutions (MFIs) faced during the financial crisis; and highlight Basel framework sections relevant to MFIs and demonstrate how these can be applied to strengthen MFIs. 2015-04-13T16:44:54Z 2015-04-13T16:44:54Z 2014 Working Paper http://documents.worldbank.org/curated/en/2014/01/24161049/microfinance-global-financial-crisis-call-basel http://hdl.handle.net/10986/21722 English en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ International Finance Corporation International Finance Corporation, Washington, DC Publications & Research Publications & Research :: Working Paper |