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Banking Services for the Poor   
Banking Services for the Poor
Managing for Financial Success
Robert Peck Christen
Hard-bound Book (6¼" x 9¼")  :   Pages : 290
2010  Edition         :   ISBN - 978-81-7188-811-5
Price : Rs. 895.00  (For sale in South Asia only)
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Today more than ever it is evident that financial organizations that fail to heed the principles of sound financial management will rapidly find themselves in trouble. Over ten years ago, Robert Peck Christen observed this in the context of microfinance programs burgeoning in the late 1990's. His concern spurred the writing of this manual.

Developed to help microfinance program administrators manage for financial success, this best-selling manual today still offers practical and clear applications of traditional financial topics to microfinance institutions.

In this manual, Christen addresses interest rate policy, management of assets and liabilities, capital and portfolio risk, and strategic financial planning—all key issues for microfinance institutions and all important for the donors, consultants, and regulators who work regularly with microfinance institutions to understand. The manual presents the theoretical framework along with numerous examples, allowing the reader to deepen his or her understanding of the subject matter.

About the Author:

Robert Peck Christen has over 25 years of experience in leading the development of the microfinance sector. He is recognized internationally for his leadership in advancing the microfinance sector as a global industry in a number of areas: commercial innovations in microfinance operations, microfinance industry performance bench-marking, international professional training programs and policies in regulation and supervision. Mr. Christen has worked in over 40 countries advising governments, banks, and microfinance service providers.


List of Tables, Boxes and Figures 


1. Introduction

1.1 Four Challenges Facing Microfinance

1.1.1 The First Challenge: Loan Repayment

1.1.2 The Second Challenge: Cost Recovery

1.1.3 The Third Challenge: Accessing Commercial Funding

1.1.4 The Fourth Challenge: Attracting Private, for-profit Equity Investment

1.2 Levels of Cost Recovery

1.3 Leverage of Donor Funding

1.4 The Relation Between Financial Sustainability and Outreach

2. Evaluating MFI Financial Sustainability

2.1 Adjusting Financial Statements to Account for the Effects of Inflation and Subsidies

2.1.1 Cost-of-inflation Adjustment Technique

2.1.2 Subsidy Adjustment Technique

2.2 Adjusting Financial Statements to Account for Loan Portfolio Risk

2.2.1 Measuring Loan Delinquency

2.2.2 Portfolio Risk Classification, Loan Loss Provisioning, and Write-offs

2.3 Setting up Financial Statements and Related Information

2.3.1 Presenting Financial Statements to Enhance the Evaluation and Management of Programme Results

2.3.2 Presentation of the Adjusted Financial Statements in Constant Currency Terms

2.4 Evaluating Financial Sustainability: Three Profitability Models 

2.4.1 Cost Recovery Model

2.4.2 Return on Equity Model

2.4.3 Modified Subsidy-adjusted Return on Assets Model

3. Setting Appropriate Interest Rates: The Key to Long-term Viability

3.1 Role of Capital in the MFI

3.2 Capital Adequacy and Leverage

3.3 The Need for Lower Leverage in the MFI than in Traditional Banks

3.4 Technical Criteria for Setting Interest Rates

3.5 Political Considerations for Setting Interest Rates on Microloans

3.6 Structuring Interest Rates and Fees

3.7 Using Effective Interest Rates to Measure Expected Yields

4. Asset/Liability Management in the Microfinance Institution

4.1 Net Interest Margin and Gap Management

4.1.1 Gap Analysis

4.1.2 Gap Management in Microfinance Institutions

4.2 Liability Management

4.2.1 Calculating Interest Expense

4.2.2 Managing Interest Expense

4.2.3 Structuring Interest Rates on Savings Deposits

4.3 Liquidity and Reserve Position Management

4.3.1 Risk-return Trade-off

4.3.2 Measuring Liquidity

4.4.3 Cash-flow-based Liquidity Management

5. Productivity Enhancement Tools

5.1 Monitoring Administrative Costs

5.2 Variables that Influence Financial Performance and Enhance Productivity

5.3 Administrative Features of Efficient Organisations

5.3.1 Staff Accountability and the Use of Incentives Systems

5.3.2 Decentralised Decision Making within Branch Offices that Operate as Profit Centers

5.3.3 Management Information Systems

5.3.4 Internal Controls and Fraud Risk

5.4 Costing of Financial Products

5.4.1 Structuring the Cost Study

5.4.2 Variable Operating Costs of Passbook Savings Account

5.4.3 Fixed Operating Costs of Passbook Savings Account

5.4.4 Indirect and Setup Costs of Passbook Savings Account

5.4.5 Financial Costs of Passbook Savings Account

5.4.6 Total Cost of Passbook Savings Account

6. Strategic Financial Planning

6.1 A Business Plan Format

6.1.1 Institutional Analysis

6.1.2 Review of Macro Context

6.1.3 Loan Portfolio

6.1.4 Funding

6.1.5 Operations

6.1.6 Special Projects

6.1.7 Capital

6.1.8 Financial Statements and Statistical Appendices

6.2 Generating Streamlined Financial Projections

6.2.1 Individual Branch Level Loan Portfolio

6.2.2 Individual Branch Level Staffing Requirements

6.2.3 Individual Branch Level Income Statement

6.2.4 Individual Branch Level Performance Indicators

6.2.5 MFI-level Consolidated Loan Portfolio, Income Statement, and Performance Indicators

6.2.6 Head Office Support Budget

6.2.7 MFI-level Balance Sheet

6.2.8 MFI-level Cash Flow



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