The New Regulation Framework of Bolivian NGO Microfinance Institutions: Perceptions on Risk Management, Solvency and Social Performance

This paper analyzes the prospective performance of Bolivian NGO MFIs in a regulated environment, specially evaluating them on risk management, solvency and social performance.Under new regulations being developed in Bolivian microfinance, NGO MFIs will be considered as financial intermediaries. They will be allowed to offer a wide range of financial services including deposits. They will also be allowed to keep their legal and non-profit status.The paper presents results from a survey that invited opinions from 32 international experts on how Bolivian NGO MFIs would perform in the new, regulated environment. It uses the cross-impact matrix method and a hypotheses test to analyze survey data. Results indicate that:

• Bolivian NGO MFIs are well positioned in social performance, but are unlikely to post good performance in all three evaluation areas;
• Stronger efforts need to be made in maintaining social performance;
• Institutions should be more professional, especially in providing timely information to regulator;
• NGO MFIs are not well positioned in risk management and solvency; but are positively related to good social performance;
• Future challenges include improvements in generating timely information for the regulator and transparency levels for clients.