A few microfinance institutions (MFIs) have implemented best business practices and made the transition to fully regulated financial institutions. Many more are in the process of undertaking this transformation or at least considering it. Rising competition among growing numbers of MFIs for both funding and clients has made improved financial performance a necessity for most if not all MFIs. Financial ratios of 17 Latin American MFIs are compared to benchmark performance ratios for the industry and with commercial Latin American banks. This small sample of data, while useful, also underlines the need for more widespread MFI reporting. Complicating reliance on financial comparisons is a complete lack of standardized measures on how well the poor are being served.
Michael Tucker is a Professor of Finance at Fairfield University in Fairfield Connecticut. He has consulted with microfinance institutions in Haiti and Nicaragua, has worked with small business start-ups in both countries, and is one of the founders of Fairfield University's Center for Microfinance Advising and Consulting (CMAC). His publications have appeared in many journals, including Ecological Economics, Financial Review, Journal of Futures Markets, and Journal of Multinational Financial Management.
Journal of Microfinance
Issue and Volume
BYU ScholarsArchive Citation
"Financial Performance of Selected Microfinance Institutions: Benchmarking Progress to Sustainability,"
Journal of Microfinance / ESR Review: Vol. 3
, Article 7.
Available at: http://scholarsarchive.byu.edu/esr/vol3/iss2/7