BULLETIN HIGHLIGHTS
MICROBANKING BULLETIN, ISSUE 19, DECEMBER 2009

Operating Efficiency: Victim to the Crisis?
Blaine Stephens, Chief Operating Officer and Director of Analysis, MIX

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s the world watched the financial crisis and ensuing economic slowdown unfold in developed economies in late 2008, observers of microfinance braced themselves for the fallout on microfinance institutions, some of which began to appear by the end of 2008. The exact causes and their contributory impacts will still take time to work out. How did rising food and fuel prices affect credit needs of poor households and their businesses? To what extent did changes in the financial markets impact MFI growth through greater pressure on MFI capital raising and refinancing needs? Would diminished household revenues from slower remittance flows and local economic slowdown put significant pressure on portfolio quality and lead to slowdown in credit growth? Whatever the combination of causes, stress signs appeared in microfinance institutional performance by the end of 2008, as growth rates slowed, profit margins tightened and, in some countries, portfolio quality deteriorated. These Highlights look at the major trends in institutional performance and explore the impact of slowed growth on operating costs. The 2008 Microfinance Benchmarks capture the operational and financial performance of nearly 1,100 MFIs from just under 100 countries. These reference points mark the first global data set of this magnitude to capture the impact of the crisis and economic slowdown on the operational and financial performance of MFIs. Together, 2008 benchmarked MFIs served 74 million borrowers with 38 billion USD in loans, and collected 23 billion USD in deposits from 67 million depositors. The subsequent analysis also makes use of a trend lines data set of 600 MFIs from 84 countries and representing 89 percent of the borrowers served in the full 2008 benchmarks data set. Taken together, the 2008 benchmarks and 2006-08