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Over-indebtedness Transparency Blog: Microfinance CEO Working Group

Published on June 3, 2014

The Microfinance CEO Working Group has recently hosted a lively blog discussion on the topic of over-indebtedness, guided by the publication of two papers: Over-Indebtedness: A Risk Management Approach and Over-Indebtedness in Mexico: Its Effect on Borrowers. MFTransparency would like to appreciate the Microfinance CEO Group for bringing this extremely important topic to discussion, and we recognize the need to continue exploring this topic.

The online discussion forum began on Tuesday, May 13, 2014 and closed on Friday, May 30, 2014. You could follow the comments and discussions shared between industry participants and the CEO working group moderators here –

Microfinance CEO Working Group: Over-Indebtedness Transparency Blog

An overview and links to download the two papers are below:

 1) Over-Indebtedness: A Risk Management Approach: this paper suggests practical steps that MFIs can take to reduce the likelihood of over-indebtedness risk occurring, addressing the following areas:

– What are the leading indicators of over-indebtedness?

– What steps can MFIs take to avoid over-indebting their clients? What are the risk mitigants and controls that will reduce the likelihood of MFIs being affected should over-indebtedness hit the wider market

Download the Paper –

Over-Indebtedness: A Risk Management Approach  April 2014 Download PDF 

El Sobreendeudamiento: Abordando la Gestion de Riesgos April 2014 Download PDF

2) Over-Indebtedness in Mexico: Its Effect on Borrowers:  this paper serves as a companion to Over-Indebtedness: A Risk Management Approach, specifically studying over-indebtedness in Mexico. The socially responsible lending community is committed to preventing a debt crisis in Mexico, similar to those that have caused major upheavals in other countries.

Microfinance CEO Working Group member FINCA International researchers engaged with branch managers of their Mexico Subsidiary to study over-indebtedness, with the aim of establishing some of the issue’s dimensions and uncovering client pathways to debt. The research combined three methods: a review of credit bureau data from a pool of loan applicants, a survey of branch managers, and qualitative interviews with borrowers themselves, most of whom were experiencing or had experienced debt problems.

Download the Paper

Over-Indebtedness in Mexico: Its Effect on Borrowers April 2014 Download PDF

El Sobreendeudamiento en México: Sus Efectos en los Prestatarios April 2014 Download PDF

 

About Microfinance CEO working Group

The Microfinance CEO Working Group works in supporting the positive development of its member organizations and the microfinance industry at large, so the field can reach its full potential of bringing financial and related services to those who have been traditionally excluded. The Working Group’s initial work has focused around support for three industry initiatives that are playing a major role in advancing commitment and capacity to responsible microfinance: The Smart Campaign, MFTranspareny and The Social Performance Task Force.

For more information, please see their website – Microfinance CEO Working Group

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