Performance Indicators for Microfinance Institutions - Technical Guide (3rd Edition)

This document looks at the increasing push for transparency in microfinance. It states that:

• There is an increasing use of financial and institutional indicators to measure the risk and performance of MFIs;
• It is hard to achieve transparency if there is no agreement on the naming and calculating of indicators measuring financial condition, risk and performance;
• The lack of universally understood indicators in microfinance led MicroRate, the Inter-American Development Bank (IDB), the Consultative Group to Assist the Poor (CGAP), the United States Agency for International Development (USAID) and two other rating agencies - MCRIL and PlaNet - to agree on the names and definitions of a set of commonly used indicators;
• The efforts of this "Roundtable Group" led to publication of a list of 20 definitions of performance indicators;
• SEEP's, a network of institutions involved in microfinance, provided valuable assistance in coordinating the final phase of this effort.

The technical guide:

• Highlights 14 most commonly used indicators and their uses;
• Provides an explanation and analysis of the indicators;
• Presents, for each indicator, the proposed definition, its meaning and potential pitfalls in its use;
• Provides benchmark values for 32 Latin American MFIs.

The document states that the guide:

• Is not intended to be a complete "how-to" manual for appraising MFIs;
• Does not discuss financial adjustments, which are needed when comparing institutions with very distinct accounting systems.