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CGAP Reflections on the Compartamos Initial Public Offering

On April 20, 2007, Banco Compartamos, a microfinance institution (MFI) that was launched in 1990 and originally funded by grants from various sources, including CGAP, completed a landmark initial public offering (IPO) of its stock.

Beyond Good Intentions

This Focus Note highlights the emerging emphasis on social performance in microfinance and reviews some of the assessment tools recently developed.

Protecting Microfinance Borrowers

Around the world, the microfinance community is paying more attention to consumer protection. Controversial topics, such as high interest rates and the overindebtedness of borrowers, have raised public concern for poor consumers in countries far and wide, from Bolivia to Bangladesh to South Africa and beyond. Yet relatively little is known about how consumer protection might apply to financial services for the poor.

The Impact of Interest Rate Ceilings on Microfinance

Interest rate ceilings imposed by governments to protect poor people unfortunately often have the opposite effect. Customers do need protection from predatory lending practices, and this Donor Brief offers other options governments and donors can use.

Key Principles of Microfinance

Because sustainable microfinance is a key element in creating solid financial markets in developing countries, CGAP's members developed and endorsed these Key Principles of Microfinance. The G8 also endorsed these principles at its June 2004 Summit in Sea Island, Georgia, USA, as part of its commitment to expanding access to microfinance. Principles address how sustainable microfinance can be a powerful instrument against poverty.

Scoring: The Next Breakthrough in Microcredit?

Scoring is a way to judge the risk of whether the self-employed poor will repay their microcredit debts as promised This Occasional Paper discusses how scoring works, what microlenders can expect from it, how to use it, and what its implications are for microcredit.

Microcredit Interest Rates

This Occasional Paper explains how a microfinance institution (MFI) should estimate the interest rate on its loans if the institution wants to become sustainable; how to calculate the effective interest yield on loans; and what different loan and repayment methods are used to determine the true rate of interest income received by an MFI. This Occasional Paper also discusses evidence that MFI clients are capable of paying high interest rates, concluding that MFIs should be able to cover their costs.

Microfinance Transparency and Reporting to Donors

Knowing and understanding the components that contribute to transparency in microfinance is half of battle. It is also particularly useful to know how donor reports can enhance transparency for the whole microfinance sector. This Donor Brief provides suggestions for achieving better transparency in reporting.

Making Sense of Microcredit Interest Rates

Why do microfinance institutions (MFIs) charge such high interest rates to the poor? This Donor Brief gives donors a quick reference to use when answering questions about seemingly high microcredit interest rates. It also explains how donors can tell if an MFI's rates are too high and suggests what to do.

A Multilateral Donor Triumphs over Disbursement Pressure

The CrediAmigo microfinance program mounted by Brazil’s Banco do Nordeste (BN) shows how an international financial institution like the World Bank can be a useful catalyst in the development of microfinance retail capacity.