Downloading - Microfinance Information Exchange
Downloading - Microfinance Information Exchange
Downloading - Microfinance Information Exchange
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FEATURE ARTICLE<br />
It is difficult to rank the different methodologies and<br />
establish a unique approach to each adjustment,<br />
given that each methodology has advantages and<br />
drawbacks. Depending on the purpose of the<br />
analysis, moreover, the approach will differ. While a<br />
unique standard has to be applied for<br />
benchmarking, a performance evaluation of a single<br />
MFI may be justified in customizing the<br />
methodology to better fit the specificities of the<br />
institution.<br />
Given the impact of different methodologies on an<br />
MFI’s bottom line, every analyst is encouraged to<br />
disclose the details of the methodology used for<br />
each adjustment and to explain how these<br />
methodologies were selected. On the other hand,<br />
people interested in comparing the true<br />
performance of MFIs (after adjustments) should use<br />
caution when doing so, and consider the fact that<br />
adjusted indicators are not always comparable,<br />
given the range of different adjustment<br />
methodologies that can be used.<br />
Alice Nègre has been the Director of Planet Rating since<br />
1999. She can be reached at anegre@planetfinance.org.<br />
Fabio Malanchini has been the Director of Microfinanza<br />
since 2000. He can be reached at<br />
fabio.malanchini@microfinanza.it.<br />
8 MICROBANKING BULLETIN, MARCH 2005