International Comparison of Loan Balances Per Borrower
MicroBanking Bulletin, No. 16, 2008
5 Pages Posted: 8 May 2009 Last revised: 17 Jul 2009
Date Written: June 1, 2008
Loan sizes are an important metric for microfinance institutions (MFIs), but how large are microfinance loans, really? The measurement and comparison of loan balances across microfinande institutions (MFIs) is potentially subject to several distortions. The main goal of this note is to compare the standard approach for comparing microcredit balances (loan balance as percentage of GNI per capita) in different countries with two alternatives to investigate if these different methodologies yield different conclusions about microfinance depth of outreach globally. There are two main potential concerns with this methodology, however: 1) income inequality within countries and 2) selection of appropriate exchange rates for conversion Then the two alternatives for comparison are comparing loan balances with respect to average GNI per capita of the poorest 40% of the population and comparing loan balances with PPP exchange rates. As part of this note, there is a downloadable file with median loan balances for all countries considered in the analysis.
Keywords: microfinance, micrecredit, depth of outreach, average loan balance per borrower, poverty
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