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Opportunities in microfinance risk management

Author

Listed:
  • Janda, Karel
  • Zetek, Pavel

Abstract

This paper examines the main risk management opportunities and threats, which microfinance institutions (MFIs) are exposed to. Awareness and understanding of these indicators can make the evolution of microfinance more accurate and simultaneously can help to locate the microfinance market in the broader picture of economic development. Growing competition improves the current situation for borrowers, because it leads to acceptable interest rates policy and expansion of existing microfinance services. At the same time, intense competition may represent threats, if the rules of regulation and supervision are not properly set. In this regard, we believe that the future of microfinance will significantly depend on the linkage between MFIs and financial markets, especially in the light of access to an alternative source of funding, the possibility of securitization and other complementary services.

Suggested Citation

  • Janda, Karel & Zetek, Pavel, 2013. "Opportunities in microfinance risk management," MPRA Paper 43960, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43960
    as

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    File URL: https://mpra.ub.uni-muenchen.de/43960/1/MPRA_paper_43960.pdf
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    References listed on IDEAS

    as
    1. Lenka DOKULILOVÁ & Karel Janda & Pavel ZETEK, 2009. "Sustainability of Microfinance Institutions in Financial Crisis," European Financial and Accounting Journal, University of Economics, Prague, vol. 2009(2), pages 7-33.
    2. Mamiza Haq & Michael Skully & Shams Pathan, 2010. "Efficiency of Microfinance Institutions: A Data Envelopment Analysis," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 17(1), pages 63-97, March.
    3. Esubalew Assefa & Niels Hermes & Aljar Meesters, 2013. "Competition and the performance of microfinance institutions," Applied Financial Economics, Taylor & Francis Journals, vol. 23(9), pages 767-782, May.
    4. Karel Janda & Barbora Svárovská, 2009. "Investing into Microfinance Investment Funds," Working Papers IES 2009/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2009.
    5. Ahmad Nawaz, 2010. "Efficiency and Productivity of Microfinance: Incorporating the Role of Subsidies," Working Papers CEB 10-009.RS, ULB -- Universite Libre de Bruxelles.
    6. McIntosh, Craig & Wydick, Bruce, 2005. "Competition and microfinance," Journal of Development Economics, Elsevier, vol. 78(2), pages 271-298, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Microfinance; Microcredit; MFIs; Financial Crises;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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