Projet de thèse en Sciences économiques
Sous la direction de Andreas Heinen.
Thèses en préparation à Cergy Pontoise , dans le cadre de ED EM2C - Economie, Mathématiques et Management de Cergy , en partenariat avec Théorie économique, modélisation et applications (laboratoire) depuis le 19-08-2012 .
Credit risk in the microfinance sector Microfinance institution provide financial services like small loans and savings to people with low income, generally excluded from the formal banking system. Due to information asymmetry, the formal banking sector cannot screen perfectly borrowers and thus ask them to provide collateral against loans to secure repayments. However poor people often times don't have the collateral needed to access the loans. Microfinance has overcome some of these challenges by devising specific products to give people with low income and no collateral, access to loan and savings. Innovations like group loans and progressive lending form the basis of the success of microfinance as a means to alleviate poverty. Furthermore, the ability to prevent entrepreneurs from borrowing again before settling the previous loan, ensured higher repayment rates than the formal sector. All this was made possible thanks to huge support from governments, charitable funds, and NGOs, who have poured in about US $20 billion increasing the outreach of microfinance institutions (MFIs). However the rapid expansion of the microfinance sector has also raised more issues and rendered the innovations mentioned above less efficient. The increased competition has widened the information asymmetries between borrowers and lenders. As a result the default rate of some MFIs increased dramatically. For instance the state of Andhra Pradesh, has recently experienced alarmingly high default rates, endangering the whole sector in the state. Some measures, like a credit information bureau are being put forward to confront the problem. In this way MFIs would have access to the borrowing history of all their customers, and could prevent lenders to fall into an over indebtedness trap. Credit risk can be indeed at different levels: 1) At the level of the clients of an MFI and the risk is that a client does not repay; 2) Credit risk at the level of the MFI, often referred to as bank risk is the risk that an MFI goes bankrupt because of bad investments, i.e. bad loans, and thus becomes unable to honor its deposits and other liabilities, and by the same token leave all its poor borrowers stranded; 3) Systemic credit risk, at the level of a country (e.g. Morocco) or region (Andhra Pradesh), that affects the viability of all MFIs present in the area, to some extent regardless of the quality of their own business model and of the way they screen and monitor their clients. At a higher level, there is also concern about how the existence of such systemic credit crises can a affect the risk return characteristics of fund providers, microfinance investment vehicles (MIVs) who channel funds from large investors to MFIs.
Credit Risks in the Microfinance Sector
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