A Technical Guide to PEARLS - A Performance Monitoring System

This paper describes one of the better known microfinance assessment methodologies - PEARLS. Designed by WOCCU, PEARLS financial monitoring system offers management guidance for credit unions and other savings institutions.

PEARLS is a set of financial ratios employed to assess the financial stability of credit unions within WOCCU. The ratios are grouped under six crucial areas of performance, which are:

• Protection;
• Effective financial structure;
• Asset quality;
• Rates of return and costs;
• Liquidity;
• Signs of growth.

Further, the paper states that PEARLS:

• Is designed to act as an early warning system for internal use by the management;
• Provides credit union managers with concise, easy-to-read reports that reveal institutional weaknesses and trends;
• Offers a strategic business planning tool to help managers implement change.

The paper concludes by comparing PEARLS with another popular performance monitoring system, CAMEL, and identifies the salient differences between the two.