6533b861fe1ef96bd12c581e
RESEARCH PRODUCT
Do microfinance rating assessments make sense? An analysis of the drivers of the MFI ratings
Leif Atle BeislandRoy Merslandsubject
Credit ratingMicrofinanceActuarial scienceTrustworthinessExcellencelawmedia_common.quotation_subjectBond credit ratingOperational efficiencyProfitability indexBusinessmedia_commonlaw.inventiondescription
Rating assessments of microfinance institutions are claimed to measure a combination of creditworthiness, trustworthiness and excellence in microfinance. Using a global dataset covering reports from 324 microfinance institutions, this study suggests that these ratings are mainly driven by size, profitability, and risk. The ratings do not seem to capture the double bottom-line objective of microfinance institutions, as our analyses are unable to prove any statistical relationship between microfinance ratings and the social objectives of these institutions. Moreover, the association between operational efficiency and microfinance ratings appears weak. Although there are some minor differences between the rating agencies, the overall results suggest that microfinance ratings convey information very similar to that communicated by traditional credit ratings.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2011-03-01 |