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Webinar: Understanding the Price Curve

Published on September 17, 2012

In September 2012 MFTransparency hosted a webinar educating industry stakeholders about the price curve in microfinance. The event was heavily over-subscribed, with hundreds of participants registered for the webinar. This shows just how keen an interest there is within the industry in understanding the topic of pricing.

A recording of the webinar, along with a PDF of the powerpoint slides and a series of Q&A responses can be seen here.

Event Presentation – download in English

Webinar: Understanding the Price Curve in Microfinance

Chuck Waterfield, September 2012

 

 

Click here to see a recording of the webinar, the written answers to participants questions and other resources which you may find useful.

Items covered in the webinar included:

  • Section 1: Quick overview of MFTransparency’s Phase I / II – Brief overview of successful Phase 1 and transition to Phase 2
  • Section 2: What is a “transparent price”? – Do we really have non-transparent pricing? Should we use Total Cost of Credit (TCC) with clients? What is the APR? What costs should we include?
  • Section 3: Curves, not averages! – What is the relationship between portfolio yield and average loan size?
  • Section 4: The cost curve drives the price curve – Why is there a price curve in microfinance? What is the relationship between operating expense ratio and average loan balance?
  • Section 5: Where does the curve start? – What is the relationship between operation costs relative to the economy (average loan balance as percentage of GNI per capita)? Are there price curves for other cost components – financial expenses and loan provision?
  • Section 6: Profits come from being “off of the curve” – What is the relationship between prices and profits (return on assets)?
  • Section 7: Moving beyond portfolio yield to True Price – Global portfolio yield is not enough and product specific portfolio yield is not enough – why? What is impact of compulsory deposits on the price of a loan?
  • Section 8: Rating MFIs on their transparency – Transparent communications to all stakeholders measured on an index.

 

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