MICROBANKING BULLETIN - Microfinance Information Exchange

BULLETIN HIGHLIGHTS AND TABLESFigure 11: Percent Change in Average Loan Balance for 50 MFIs (1998 to 1999)Low endBroad/High end-80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120%To look at this issue in more detail, we refer againto the set of MFIs with both 1998 and 1999information (MFIs which are not all financially selfsufficient).Of the 50 institutions with loan balancedata for both years, roughly half (23) experienced adecrease in average loan balance from 1998 to1999 and the other half (25) experienced anincrease (2 stayed the same). Their percentchange is depicted in Figure 11.A closer look at the characteristics of theseinstitutions reveals that a larger number of MFIsserving broad or high-end markets increased theiraverage loan balance from 1998 to 1999. Also,except for one MFI, the MFIs that experienced thelargest decreases in their average loan balanceswere all serving the low-end market. One possibleexplanation is that perhaps the low-end MFIs weregrowing faster, which means that their portfoliosconsisted of a large percentage of new clients withsmaller loans. This explanation only works for acouple of low-end MFIs, and in general there doesnot appear to be a strong correlation betweenchange in average loan balance and the change inthe number of clients.While it might be assumed that a decline in averageloan balance will negatively affect self-sufficiency,this is not necessarily the case. Figure 12 showsthe change in FSS for low-end MFIs that increasedtheir depth of outreach. Out of the 13 programsthat fall within this category, 6 increased their FSSratio from 1998 to 1999. This issue deservesfurther analysis, but it reinforces the idea that thereis not necessarily a trade-off between depth ofoutreach and profitability.34 MICROBANKING BULLETIN, SEPTEMBER 2000