> Posted by Center Staff
Microfinance has grown rapidly in recent years and provides access to financial services to millions of people worldwide who are at the base of the global income pyramid. It is an effective tool that opens new opportunities for many who otherwise would not be able to take advantage of these services and products.
Some microfinance markets, however, are showing signs of over-indebtedness and overheating. In light of the potentially negative repercussions of over-indebtedness, every effort should be made to prevent these markets from overheating.
As socially oriented investors, responsAbility Social Investments AG, Triodos Investment Management BV and the Council of Microfinance Equity Funds attribute the utmost importance to reducing the risk of over-indebtedness.
The study commissioned by these three market players offers a first important step towards an early warning index of over-indebtedness in the microfinance sector.
Information on this index and the study´s main findings can be found in this Executive Summary. The aim of the initiative is to help the microfinance sector avoid future crises.
For detailed information, please see the full version of the study: “Over-Indebtedness and Microfinance – Constructing an Early Warning Index.”