{"id":323638,"date":"2010-02-15T16:03:50","date_gmt":"2010-02-15T21:03:50","guid":{"rendered":"tag:http:\/\/www.economist.com,2009:21004841"},"modified":"2010-02-15T16:03:50","modified_gmt":"2010-02-15T21:03:50","slug":"trouble-in-grameen-land","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/323638","title":{"rendered":"Trouble in Grameen-land?"},"content":{"rendered":"<p>DAVID ROODMAN, a fellow at the Centre for Global Development, blogs about microfinance <a href=\"http:\/\/blogs.cgdev.org\/open_book\/\">here<\/a> (he&#8217;s writing a book on it). I found <a href=\"http:\/\/blogs.cgdev.org\/open_book\/2010\/02\/grameen-bank-which-pioneered-loans-for-the-poor-has-hit-a-repayment-snag.php\">this post<\/a> (and a couple of follow-ups) very interesting indeed. Mr Roodman has crunched the numbers on late payments, delinquent borrowers, and such, using the data from the Grameen Bank, which (as he points out) very helpfully (and somewhat unusually for the industry) posts them on its website. Stellar repayment rates\u2014the much-touted figure is 98%\u2014are an important ingredient in making microfinance work. Mr Roodman shows that Grameen&#8217;s own data show several negative developments over the last year or so. For instance, the percentage of amounts actually repaid has fallen from being consistently around or above 98% to a little over 96.5%.<\/p>\n<p>That&#8217;s still high, right? Yes, but&#8230;at what point, given microfinance&#8217;s wafer-thin margins, does delinquency become a genuine cause for worry? Mr Roodman poses exactly the right question, I think, when he writes:<\/p>\n<blockquote>\n<p>I think about this graph in two ways. One is by focusing on the ending <em>level<\/em> of 96.54%. That seems high in absolute terms. But it is low by  historical standards. And Rich Rosenberg, in his <a href=\"http:\/\/www.cgap.org\/p\/site\/c\/template.rc\/1.9.2698\">authoritative  field guide<\/a> to delinquency metrics (quoted by Pearl and Phillips)  and in a recent <a href=\"http:\/\/microfinance.cgap.org\/2009\/09\/17\/is-95-a-good-collection-rate\/\">post<\/a>,  explains that a 95% collection rate can spell disaster&#8230;.<\/p>\n<p>Another way to analyze the graph is by focusing on the recent <em>change<\/em>.  Whether or not Grameen Bank is yet in the red zone, it seems likely  that something bad is happening. In Rosenberg\u2019s language, the on-time  collection rate graphed above is an excellent <span id=\"apture_prvw2\" class=\"aptureLink \"><span class=\"aptureLinkIcon\" style=\"background-position: right -448px;\">&nbsp;<\/span><a class=\"aptureLink snap_noshots\" href=\"http:\/\/www.cgap.org\/gm\/document-1.9.2698\/OccasionalPaper_03.pdf\">red  flag<\/a><\/span> indicator because it plummets as soon as borrowers  start struggling. It is a leading indicator of trouble, a canary in the  coal mine.<\/p>\n<\/blockquote>\n<p>There&#8217;s plenty of other good stuff in there, including, of course, the graph referred to above (and several others). Well worth reading for anyone interested in microfinance, and looking to move beyond either the hype or the naysayers.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>DAVID ROODMAN, a fellow at the Centre for Global Development, blogs about microfinance here (he&#8217;s writing a book on it). I found this post (and a couple of follow-ups) very interesting indeed. Mr Roodman has crunched the numbers on late payments, delinquent borrowers, and such, using the data from the Grameen Bank, which (as he [&hellip;]<\/p>\n","protected":false},"author":5692,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-323638","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/323638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/5692"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=323638"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/323638\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=323638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=323638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=323638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}