Microcredit and Microfinance Glossary
This Microcredit and Microfinance Glossary has been compiled from different sources. While efforts have been made to include as many relevant terms as possible, there may be a few missing. Also, different sources may have defined the same term, and all of these have been included. Currently, there are 321 terms in this list

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AGo to alphabet index

Ability to Pay:
A fuzzy concept that does not correspond in social science usage to what we would infer from common sense. Whether or not someone commands enough resources to contract a transaction (cash or credit) is not what is usually meant by the phrase. Ability to pay is a subjective judgment predicated on some assumption as to what people ought to pay. Thus, the low-income clients are said to have a lower ability to pay than middle-income earners, irrespective of whether or not they buy the good/service. It is unclear whether the exponents of the ability-to- pay concept would agree that making credit available increases such ability. See willingness to pay. Source: Virtual Library on Microcredit

Accumulating Savings and Credit Associations (ASCAs):
Informal savings groups that resemble ROSCAs but are slightly more complex. In an ASCA, all members regularly save the same fixed amount while some participants borrow from the group. Interest is usually charged on loans. ASCAs require bookkeeping because the members do not all transact in the same way. Some members borrow while others are savers only, and borrowers may borrow different amounts on different dates for different periods. If members pay interest on their loans, the return to savings has to be individually calculated and fairly shared among the group. Source: CGAP

Active Clients:
The number of clients with loans outstanding on any given date. An institution's official statistics on active clients are usually recorded as the number of clients with loans outstanding on the date its financial statements are filed. Source: ACCION

Active Loan Portfolio:
The total amount loaned out less the total amount of repaid loans; i.e., all money that is "on the street" or owed to the institution in the form of loans on the date the report is filed. Source: ACCION

A variant of the ability-to-pay argument requiring value judgments about the distribution of income. If something is "unaffordable" to poor people this might mean they should not purchase it even if they choose to! The argument is that it will reduce the income they have available to spend on other goods and services the evaluator considers socially more valuable. Thus, poor people "should not" smoke nor drink nor buy entertainment with subsidies provided by the government to compensate for income inequalities. Implicit is the idea that the donor/benefactor should make pricing decisions that correct for an inequitable distribution of income. This in turn implies that when prices are less than costs, someone must ante up a subsidy to cover the difference the amount a consumer will pay for a particular quantity of a good or service. In consumer demand theory, willingness to pay automatically implies ability to pay. In contemporary social science writing, "ability to pay" is sometimes contrasted with willingness to pay. The implicit assumption here is that even though people are willing and actually do pay a certain amount, they lack the ability to pay because they should have spent this money on something else. Buying the good (e.g., water) results in a loss of consumption of some other good or service and places the purchasers further below some socially defined minimum-consumption standard. Source: Virtual Library on Microcredit

Apex Scheme:
Wholesale financing, second-tier lending, on-lending. Source: Calmeadow

Also called evaluation. Assessments include instrumental appraisals, rating exercises, and other activities that may determine how well an institution performs financially, operationally, and managerially. Source: ACCION

Asset Liability Management (ALM)
The process of planning, monitoring and controlling asset and liability volumes, maturities, rates and yields. A primary goal of ALM is to minimize interest rate risk while still earning sufficient profits. ALM is more important and complex for institutions engaged in financial intermediation because interest rate risk tends to be higher for these institutions than for institutions engaged solely in credit or savings. Financial institutions manage interest rate risk by carefully maintaining a balance between different types and volumes of assets (in particular, loans) and liabilities (in particular, savings). Source: CGAP

Anything of value. Any interest in real or personal property which can be appropriated for the payment of debt. Source: Renz and Massarsky

Examination of organizational input/output cash flow (ie. internal audits, external audits, fraud investigation). Source: Calmeadow

Average Loan Balance per Borrower:
Gross Loan Portfolio / Number of Active Borrowers. Source: The MIX Market

Average Number of Active Borrowers:
(Beginning year Number of Active Borrowers + Year end Number of Active Borrowers). Source: The MIX Market

Average Number of Active Borrowers:
Average Savings Balance per Saver. Source: The MIX Market

Average Savings Balance per Saver/ GNI per Capita (%):
Average Savings Balance per Saver/ GNI per capita.

BGo to alphabet index

Bad Debt:
A debt that is not collectible and is therefore worthless to the creditor. Source: Renz and Massarsky

Balance Sheet:
Financial statement presenting measures of the assets, liabilities and owner's equity or net worth of business firm or nonprofit organization as of a specific moment in time. Source: Renz and Massarsky

A licensed financial intermediary regulated by a state banking supervisory agency. It may provide any of a number of financial services, including:
deposit taking, lending, payment services, and money transfers. Source: The MIX Market

Bankable people are those deemed eligible to obtain financial services that can lead to income generation, repayment of loans, savings, and the building of assets. Source: International Year of Microcredit 2005

Peer group benchmarking puts performance measurements in context by comparing an institution (e.g., an MFI) with similar institutions based on a common factor, such as region, size or methodology. A benchmark can also refer to the standard against which all similar institutions are compared. Source: ACCION

Borrowers per Staff Member:
Number of Active Borrowers / Number of Personnel. Source: The MIX Market

Bridge financing:
Interim financing used to solidify a position until more permanent financing can be made. The ACCION Latin America Bridge Fund provides bridges from microfinance institutions to local capital markets. Source: ACCION

Bridge Loan:
Short-term loan to provide temporary financing until more permanent financing is available. Source: Renz and Massarsky

Business Development Services:
Support services that contribute to the growth of enterprises (eg. business planning, client training, networking, marketing technical support). Source: Calmeadow

Business Plan:
A document that describes an organization's current status and plans for several years into the future. It generally projects future opportunities for the organization and maps the financial, operations, marketing and organizational strategies that will enable the organization to achieve its goals. Source: Renz and Massarsky

CGo to alphabet index

A U.S. Federal Reserve-developed diagnostic tool that measures the Capital adequacy, Asset quality, Management, Earnings and Liquidity of financial institutions. ACCION adapted the CAMEL instrument to the microfinance industry as a quantitative and qualitative assessment of MFI financial performance. Source: ACCION

Capital Adequacy:
A quantitative and qualitative measure of an institution's level of equity versus the risk it incurs. This measurement shows a program's ability to absorb loan loss. Source: ACCION

Capital markets:
The market for trading long-term debt instruments (those that mature in more than one year). Source: ACCION

Capital Markets:
Those financial markets, including institutions and individuals, that exchange securities, especially long-term debt instruments. Source: Renz and Massarsky

Broadly, all the money and other property of a corporation or other enterprise used in transacting its business. Source: Renz and Massarsky

Long-term debt, preferred stock and net worth. The loan capital of a community development loan fund; includes that which has been borrowed from and is repayable to third parties as well as that which is earned or owned by the loan fund (i.e. "permanent capital"). Source: Renz and Massarsky

Cash Flow Financing:
Short-term loan providing additional cash to cover cash shortfalls in anticipation of revenue, such as the payment(s) of receivables. Source: Renz and Massarsky

Client Desertion:
This key term deals with analysis of client exiting and desertion. Source: Calmeadow

Client Graduation:
Microenterprise growth to medium-size enterprises and financial self-sustainability. The dynamics of microenterprise change of time. Source: Calmeadow

Clients below poverty line (%):
Percentage clients below poverty line (where the poverty line is defined as population living on less than US$2/day). Source: The MIX Market

Clients in bottom half of the population below the poverty line (%):
Percentage clients in bottom half of the population below the poverty line (where the poverty line is defined as population living on less than US$2/day). Source: The MIX Market

Clients in households earning less than US$1/day per household member (%):
Percentage clients in households earning less than US$1/day per household member. Source: The MIX Market

Clients starting microenterprise for the first time (%):
Percentage clients who access financial services from the MFI and who are starting a microenterprise for the first time. Source: The MIX Market

Asset pledged by a borrower to secure a loan, which can be repossessed in the case of default. In a microfinance context, collateral can vary from fixed assets (a car, a sewing machine) to cross-guarantees from peers. Source: ACCION

Assets pledged to secure the repayment of a loan. Source: Renz and Massarsky

In a microfinance context, commercialization refers to the move by MFIs to provide services on a financially self-sufficient basis and under prevailing commercial principle and regulations. Source: ACCION

Community Economic Development :
Normally used by North American organizations, the focus is supporting communities with goals of creating local employment, preventing rural-urban flight and strengthening long term linkages within the community. Microfinance and microenterprise development may be part of these strategies. Source: Calmeadow

Community Economic Development:
Community Economic Development is a process by which communities can initiate and generate their own solutions to their common economic problems and thereby build long-term community capacity and foster the integration of economic, social and environmental objectives. Source: Virtual Library on Microcredit

Community-based finance institution:
The term "Community-based finance institution" (CBFI) has been formulated to define organizations which enable low-income groups to participate fully and democratically in the development process and which have their roots in the community. Frequently, these organizations are referred to as co-operatives, but some community-based organizations are in fact not co-operatives but groups with a similar structure and objectives. Source: Virtual Library on Microcredit

Compulsory / Mandatory Savings:
Savings payments that are required as part of loan terms or as a requirement for membership, usually in a credit union, cooperative, microfinance institution, village bank or savings group. Compulsory savings are often required in place of collateral. The amount, timing, and level of access to these deposits are determined by the policies of the institution rather than by the client. Compulsory savings policies vary:
deposits may be required weekly or monthly, before the loan is disbursed, when the loan is disbursed, and/or each time a loan installment is paid. Clients may be allowed to withdraw at the end of the loan term; after a set number of weeks, months or years; or when they terminate their memberships. Source: CGAP

Contractual / Programmed Savings:
Savings in which the client commits to regularly depositing a fixed amount for a specified period of time to reach a pre-determined goal. After the maturity date, the client can withdraw the entire amount plus the interest earned. Early withdrawal is prohibited or penalized. Contractual products help depositors accumulate funds to meet specific expected needs, such as expenses associated with school, a festival, a new business, an equipment purchase, or a new house. They also help financial institutions better predict the volume and timing of deposits and withdrawals. Source: CGAP

Cooperative/Credit Union:
A non profit, member-based financial intermediary. It may offer a range of financial services, including lending and deposit taking, for the benefit of its members. While not regulated by a state banking supervisory agency, it may come under the supervision of regional or national cooperative council. Source: The MIX Market

A co-operative, as defined by the International Labour Organization is an association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic end through the formation of a democratically controlled business organization, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking. Source: Virtual Library on Microcredit

Cost per Borrower:
Operating Expense/ Period Average Number of Active Borrowers. Source: The MIX Market

Cost to register a business (% of GNI per capita):
Cost to register a business is defined as the total cost involved in accomplishment of all procedures necessary to start a business. The cost is expressed as a percentage of country's GNI per capita. (The costs calculated here exclude bribes). Source: The MIX Market

An agreement or promise to do or not to do a particular thing; to enter into a formal agreement; a promise incidental to a deed or contract. The following are functional objectives guiding most covenants:
full disclosure of information, preservation of net worth, maintenance of asset quality, maintenance of adequate cash flow, control of growth, control of management, assurance of legal existence and concept of going concern, provision for lender profit or program goals. Source: Renz and Massarsky

Credit Bureau:
An agency that contains information on the credit history of consumers so that creditors can make decisions about granting of loans. Source: ACCION

Credit Rating:
Usually used to determine a bank or financial institution's credit risk, a credit rating is an evaluation of an individual's or company's ability to repay obligations or its likelihood of not defaulting; also see CAMEL. Source: ACCION

Credit Scoring:
Measures the risk associated with each credit applicant/ microborrower. Credit scoring is an automated system that assigns points for various credit factors, providing lenders with the ability to grade prospective clients and to calculate the risk of extending credit. In a microfinance context, the credit scoring method is modified to take into account a microentrepreneur's experience, character and capacity to repay. The final credit score is an overall measure of the creditworthiness of the credit applicant. Source: ACCION

Credit Union / Savings & Credit Cooperative / Financial Cooperative:
Not-for-profit member-owned financial institutions that are 1) governed by a board of directors comprised of members and 2) typically managed by paid staff who may or may not be assisted by volunteer committees of members. The board is elected by the members, each of whom has one vote. Credit unions and financial cooperatives are typically savings-based, i.e. they fund their loan portfolio with member deposits as opposed to external financing. Credit unions and financial cooperatives must be registered; they may be regulated by a special cooperative law or by the formal financial sector regulations in a country. Standards set out in cooperative law may be somewhat easier to meet than those in the countryís banking law; for example, the capital adequacy requirementsóif they existómay be lower. At the same time, cooperatives may not be allowed to offer the same range of services as banks; they may not, for example, be allowed to offer current accounts. Where credit unions and financial cooperatives are regulated by the same entity as other financial institutions, they must comply with regulations issued either specifically for financial cooperatives or more generally for non-bank financial entities. Source: CGAP

Credit Union:
A nonprofit, cooperative financial institution owned and run by its members. Members pool their funds to make loans to one another. The volunteer board that runs each credit union is elected by the members. Most credit unions are organized to serve people in a particular community, group or groups of employees, or members of an organization or association. Source: ACCION

Credit Union:
In the financial sector, co-operatives which enable savings to be made and loans to be taken are generally known as "credit unions" which are registered under the legislation dealing with co-operatives in each country. The basic credit union is composed of a group of people having a "common bond" who may be resident in the same neighbourhood or employed at the same place of work, or it can be a religious or ethnic grouping. The principal reason for the emphasis on a common bond is that the social pressure of the group is considered a very important condition as security for loans It is a form of collateral which is not available in conventional finance. Source: Virtual Library on Microcredit

Credit Unions (including Credit Cooperatives):
Community-based, financial co-operatives that are normally democratic and non-profit, with savings mechanisms and lower interest loans. Members invest in shares, giving them certain entitlements (eg. Election of boards or voting on policy). Source: Calmeadow

Current Accounts:
Demand deposit accounts that allow the account holder to transact using checks. Account holders can also transact face-to-face in the branch and may be able to use ATMs or point of service devices. Source: CGAP

Current Asset:
Assets that will normally be turned into cash within a year. Source: Renz and Massarsky

Current Liability:
Liability that will normally be repaid within a year. Source: Renz and Massarsky

Current Ratio:
Current assets divided by current liabilities -- a measure of liquidity. Generally, the higher the ratio, the greater the "cushion" between current obligations and a firm's ability to meet them. Source: Renz and Massarsky

DGo to alphabet index

Debt Service Reserve:
Term used to refer to cash reserves set aside by a borrower, either by internal policy or lender covenant, to repay debt in the event that cash generated by operations is insufficient. Source: Renz and Massarsky

Debt Service:
Amount of payment due regularly to meet a debt agreement; usually a monthly, quarterly or annual obligation. Source: Renz and Massarsky

An amount owed for funds borrowed. The debt may be owed to an organization's own reserves, individuals, banks, or other institutions. Generally, the debt is secured by a note, bond, mortgage, or other instrument that states repayment and interest provisions. The note, in turn, may be secured by a lien against property or other assets. Source: Renz and Massarsky

A failure to discharge a duty. The term is most often used to describe the occurrence of an event that cuts short the rights or remedies of one of the parties to an agreement or legal dispute, for example, the failure of the mortgagor to pay a mortgage installment, or to comply with mortgage covenants. Source: Renz and Massarsky

Failure to make timely payment of interest or principal on a loan, or to otherwise comply with the terms of a loan. Source: ACCION

In a monetary context, something that has been made payable and is overdue and unpaid. Source: Renz and Massarsky

Demand / Sight Deposit:
Fully liquid accounts in which the saver may deposit and withdraw any amount at any time with no advance commitment. The saver must maintain a minimum required balance. Demand deposit transactions (deposits, withdrawals, transfers/payments) may be made using passbooks, debit cards and ATMs and/or POS devices, and, in current accounts, checks. If clients overdraw their demand deposit accounts, financial institutions generally charge penalties and/or high levels of interest if they do not reject the payment outright. Source: CGAP

Deposit Insurance
Insurance to reimburse depositors for the loss of their deposits in the event that their financial institution fails. Deposit insurance is typically provided by government as an adjunct to regulation and supervision. It may also be required by regulation but provided by private insurers. Deposit insurance does carry a risk:
by assuring that depositors will not lose their savings if a bank goes under, it can 1) undermine depositorsĀEmotivation to oversee the institutions in which they deposit and 2) encourage managers to take on more risk than they otherwise would if the deposits were not insured. Source: CGAP

Deposit interest rate (%):
Deposit interest rate is the rate paid by commercial or similar banks for demand, time, or savings deposits. Source: The MIX Market

Deposit Rates:
Usually refers to rates offered to resident customers for demand, time, or savings deposits. Often, rates for time ands savings deposits are classified according to maturity and amounts deposited. In addition, deposit money banks and similar deposit-taking institutions may offer short-and medium terms instruments a specified rates for specific amounts and maturities; these are frequently termed ďcertificates of depositĀE Source: The MIX Market

Development Bank:
Generally country-owned and state-based, these banks offered agricultural credit originally and have moved to offer microfinancial services. Source: Calmeadow

Development Finance:
Term that encompasses all financial services provided to low-income clientele in less developed nations - including microloans, microsavings, microinsurance, etc. Source: ACCION

The actual transfer of financial resources. The disbursement of a microloan reflects the transfer of the loan amount from the lending institution to the borrower. Source: ACCION

Donations received in the financial year to apply towards operation of financial services. Source: The MIX Market

Formal financial institutions that offer a microfinance window such as Vancity Credit Union or Hatten Bank. This process is called downscaling. Source: Calmeadow

Due Diligence:
Refers to the task of carefully confirming all critical assumptions and facts presented by a borrower. This includes verifying sources of income, accuracy of financial statements, value of assets that will serve as collateral, the tax status of the borrower and any other material facts presented by the borrower. Source: Renz and Massarsky

EGo to alphabet index

Impact of design for political participation, legal awareness, ability to exercise personal and socio-political rights and freedoms. Source: Calmeadow

Endowment or Trust:
A fund that contains assets whose use is restricted only to the income earned by these assets. Source: Renz and Massarsky

Impact of programs on the natural environment, creation of environmental initiatives. This literature includes environmentally-focused loan funds. Source: Calmeadow

Equity Participation:
An ownership position in an organization or venture taken through an investment. Returns on the investment are dependent on the profitability of the organization or venture. Source: Renz and Massarsky

The value of property in an organization greater than total debt held on it. Equity investments typically take the form of an owner's share in the business, and often, a share in the return, or profits. Equity investments carry greater risk than debt, but the potential for greater return should balance the risk. Source: Renz and Massarsky

Exchange Rates:
Price in a given currency at which bills drawn in another currency may be bought. In the MIXMarket Environment section the exchange rates are expressed in time series of national currency units per U.S. Dollar using data from the IFS/IMF. For period average rates the data are based in the monthly average of market rates or of official rates of the reporting country (and principal, secondary or tertiary rates for countries maintaining multiple exchange agreements). These estimates are derived on the basis of a simple average of the end-of-month market rates in the markets of the reporting country. Source: The MIX Market

External Audit:
A formal, independent review of an institution's financial statements, records, transactions and operations. External audits are usually performed by professional accountants in order to lend credibility to financial statements and management reports, to ensure accountability for donor funds, or to identify internal weaknesses in an organization. The external audit process is key to transparency. Source: ACCION

FGo to alphabet index

Financial Depth:
Liquid liabilities (M3) as % of GDP.
Liquid liabilities are also known as broad money, or M3. They are the sum of currency and deposits in the central bank (M0), plus transferable deposits and electronic currency (M1), plus time and savings deposits, foreign currency transferable deposits, certificates of deposit, and securities repurchase agreements (M2), plus travelers checks, foreign currency time deposits, commercial paper, and shares of mutual funds or market funds held by residents. Source: The MIX Market

Financial Expense:
All interest, fees and commissions incurred on all liabilities, including deposit accounts of clients held by the MFI, commercial and concessional borrowings, mortgages, and other liabilities. Source: The MIX Market

Financial Intermediation
The process of mobilizing deposits and disbursing them as loans to clients or investing them in other types of financial instruments. Managing financial intermediation is significantly more demanding than managing credit alone. In particular, maintaining the quality of assets is more important in order to protect the value of deposits and managing liquidity, internal controls and assets vis-ĀEvis liabilities are more challenging. Source: CGAP

Financial Management:
Financial management is a broad topic in microfinance operation management including interest rate setting, revenue generation, cost analysis, delinquency management, profit centres, credit bureaus and general accounting. Source: Calmeadow

Financial Revenue (Total):
Includes all Financial Revenue and Other Operating Revenue. Source: The MIX Market

Financial Revenue:
Includes revenue generated from both the Gross Loan Portfolio and investments. Source: The MIX Market

Financial Self-Sufficiency (FSS):
Total operating revenues divided by total administrative and financial expenses, adjusted for low-interest loans and inflation. In a microfinance context, an institution is financially self-sufficient when it has enough revenue to pay for all administrative costs, loan losses, potential losses and funds. Source: ACCION

Financial Services Development:
Innovative services for microcredit clients ĀEeg. microleasing, insurance, money transfers. Source: Calmeadow

Fixed Assets:
Long-lived property of a microentrepreneur or firm that is used in that business' production (i.e., a sewing machine is a fixed asset for a microentrepreneur who makes clothing). Fixed-asset lending is a type of microfinance product that disburses loans expressly for the purpose of purchasing these fixed assets, which aid in production volume and income. Source: ACCION

Fixed-Asset Lending/ Loan:
Microfinance product in which loans are disbursed expressly for the purpose of purchasing fixed assets, which aid in production volume and income. Source: ACCION

Foreign Direct Investment, net inflows (% of GDP):
Foreign Direct Investment (FDI) is net direct investment that is made to acquire a lasting management interest (usually 10 percent of voting stock) in an enterprise operating in a country other than that of the investor (defined according to residency). The investor's purpose is to be an effective voice in the management of the enterprise. FDI is the sum of net equity capital, net reinvestment of earnings, net other long-term capital, and net short-term capital as shown in the balance of payments. Source: The MIX Market

Formal Financial Sector:
Policy and processes involved with the formal financial sector, including interest rates, exchange rates, inflation, market fragmentation and corrective measures. Source: Calmeadow

Fund Advisor(s):
The company or companies that are given primary responsibility for managing a fund. Source: The MIX Market

Fund Assets (US$):
Total Assets held by a Fund. Source: The MIX Market

Fund Assets allocated to MF Investments (US$):
The fund's monies set aside specifically for investment in the Microfinance sector (as opposed to other industries/sectors/ type of projects that the fund may invest in). Source: The MIX Market

Fund Assets invested in or committed to MF Investments, but not yet disbursed (US$):
The fund assets already invested in MF sector or committed to specific MFIs, but not yet paid out to these institutions. This may be more than the amount invested and disbursed (not detailed here). It is an efficiency measure for how well the Fund commits monies to MFIs (not how well the Fund disburses or "hands out" the monies). Source: The MIX Market

Fund Balance:
Net worth in a nonprofit organization; total assets minus total liabilities. Source: Renz and Massarsky

Fund currency:
Main currency used by the fund for valuation purpose. Source: The MIX Market

Fund Manager:
The individual(s) responsible for the overall fund strategy, as well as the buying and selling decisions of the securities in a fund's portfolio. Management teams may consist of many people, but if one manager is considered a central figure or lead manager, that individual's name should be known. Of importance is the year in which the manager began running the fund to determine how much of a fund's performance is attributable to its current management. The term "Multiple Managers" refers to a situation when more than two people are involved in the fund management, and they manage independently. Where this term is used, quite often the fund has divided net assets in set amounts among the individual managers. In most cases, multiple managers are employed at different subadvisors or investment firms. Source: The MIX Market

Fund Subadvisor(s):
The advisor can employ another company, called the subadvisor, to handle the fund's day-to-day management. In these instances, the portfolio manager generally works for the fund's subadvisor, and not the advisor. Source: The MIX Market

The quality of money that makes one individual specimen indistinguishable from another. Anything used as money (gold, shells, bank notes) must have this quality. The fungibility of money makes it difficult for lenders to ensure that borrowers use the loan funds in the way lenders wish; one way they try to get round "misuse of funds" is to lend in kind. Often a person will borrow money for one stated purpose, but the effect of the loan is to finance another activity. Say, for example, that I intend to improve my house using savings but someone offers me a home improvement loan on attractive terms. The effect of the loan is not to increase quality of the housing stock, as the lender intended, but to enable me to undertake some other activity I could not otherwise have financed buying a motorcycle, taking a holiday, or perhaps partying every night. Microfinance lenders such as donors and NGOs tend to dislike this because (a) they don't think poor people should use their limited incomes on such things, and (b) it reduces the funds available for lending to other potential clients or beneficiaries. Source: Virtual Library on Microcredit

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GDP (current US$):
Gross domestic product (GDP) measures the total output of good and services for final use occurring within the domestic territory of a given country. Gross domestic product at purchaser values (market prices) is the sum of gross value added by all resident and nonresident producers in the economy plus any taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Source: The MIX Market

GDP Growth (annual %):
Gross Domestic Product (GDP) measures the total output of goods and services for final use occurring within the domestic territory of a given country, regardless of the allocation to domestic and foreign claims. Gross domestic product at purchaser values (market prices) is the sum of gross value added by all resident and nonresident producers in the economy plus any taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Source: The MIX Market

Gender Relations:
Focuses on womenís bargaining power within the household, power imbalances between the genders, effects of microfinance on gender-related issues, empowerment and/or ill effects on women, girl/child issues. (Also cross-listed as ĎwomenĀE). Source: Calmeadow

General Management:
General management issues deal with the overall operations, governance and policies of the institution. This key term is used for manuals and other general guides which span a number of management areas. Source: Calmeadow

General Recourse:
Rights to demand payment from the general assets of the debtor, without seniority in access to any specific assets. Source: Renz and Massarsky

Gini Index:
Gini index measures the extent to which the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentages of total income received against the cumulative number of recipients, starting with the poorest individual or household. The Gini index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Thus a Gini index of zero represents perfect equality, while an index of 100 implies perfect inequality. GNI (gross national product, or GNP, in the 1968 SNA terminology) measures the total domestic and foreign value added claimed by residents. GNI comprises GDP plus net receipts of primary income (compensation of employees and property income) from nonresident sources. Source: The MIX Market

GNI per capita, Atlas method (current US$):
GNI per capita (formerly GNP per capita) is the gross national income, converted to U.S. dollars using the World Bank Atlas method, divided by the midyear population. GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad. GNI, calculated in national currency, is usually converted to U.S. dollars at official exchange rates for comparisons across economies, although an alternative rate is used when the official exchange rate is judged to diverge by an exceptionally large margin from the rate actually applied in international transactions. To smooth fluctuations in prices and exchange rates, a special Atlas method of conversion is used by the World Bank. This applies a conversion factor that averages the exchange rate for a given year and the two preceding years, adjusted for differences in rates of inflation. Source: The MIX Market

Anything related to the activities of governing the organization (eg. Board of directors, bylaws, and so on) Source: Calmeadow

Process by which a board of directors, through management, guides an institution in fulfilling its corporate mission and protects its assets. Source: ACCION

Gross Domestic Savings (% of GDP):
Gross Domestic Savings are calculated as the difference between GDP and total consumption. Total consumption expenditures cover the consumption by households and the general government. Source: The MIX Market

Gross Loan Portfolio:
All outstanding principal for all outstanding client loans, including current, delinquent and restructured loans, but not loans that have been written off. It does not include interest receivable. It does not include employee loans. Source: The MIX Market

Group Lending:
Grameen lending is a well known form of group of groups lending. It utilizes a combination of peer group methodology and village banking. Source: Calmeadow

Group Lending:
Lending mechanism which allows a group of individuals - often called a solidarity group - to provide collateral or loan guarantee through a group repayment pledge. The incentive to repay the loan is based on peer pressure - if one group member defaults, the other group members make up the payment amount. Source: ACCION

Guarantee Fund:
Also known as bridge funds. A guarantee fund can provide the organization's initial access to the formal financial sector, strengthen the organization's capabilities as financial intermediaries and provide important leverage in terms of lending capability. Source: Calmeadow

Guaranteed Loan:
A pledge to cover the payment of debt or to perform some obligation if the person liable fails to perform. When a third party guarantees a loan, it promises to pay in the event of a default by the borrower. Source: Renz and Massarsky

HGo to alphabet index

This literature deals with the relationship between microfinance and health (nutritional levels, infant and maternal health, disease and disability). It may relate to the effects of microfinance on health or how to design programs with these issues in mind. Freedom from Hunger's Credit with Education program would be found here as it uses micrcredit to improve nutritional levels and reduce infant mortality. Source: Calmeadow

Impact on income levels, education, cash flow and savings acquisition at the household level. Source: Calmeadow

Housing Finance:
A specialized loan product that allows households of both microentrepreneurs and wage-earners to finance home improvements or additions. Loans tend to be longer-term, and in larger amounts, than traditional microenterprise loans. In the case of microbusiness owners, home improvement loans can enhance at-home businesses. Source: ACCION

Human Resources:
This key term relates to personnel incentive schemes, staff recruitment, profiles, establishing an institutional culture and staff management. Source: Calmeadow

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Impact Level:
The systemic level at which change can be quantified or qualified implying causality. Source: Calmeadow

Impact/Target Market:
This category investigates the effects of programmatic activity on specified client populations. It also includes how to design programs for a specific client group. Source: Calmeadow

Indigenous Populations:
Focusing on the unique microfinancial needs of First Nations, Native Americans and Aboriginal populations. Source: Calmeadow

Individual Lending:
Single-client lending where repayment relies solely on the individual. Source: Calmeadow

Inflation Rate (Changes in Consumer Prices):
Indices shown for Consumer Prices are the most frequently used indicators of inflation and reflect changes in the cost of acquiring a fixed basket of goods and services by the average consumer. The percent changes are calculated from the index number series. Preference is given to series having wider geographical coverage and relating to all income groups, provided they are no less current than more narrowly defined series. The weights are usually derived from household expenditure surveys (which may be conducted infrequently). Other limitations might exist in terms of coverage of commodities for pricing, income groups, or their expenditure in the chosen index. The Laspeyres index formula is the most commonly used to calculate the changes in consumer prices. Source: The MIX Market

Informal Economy:
The term "informal economy" became current in the 1970s as a label for economic activities which take place outside the framework of corporate public and private sector establishments. Such economic activities are characterized by the ILO as having the following features:
small size of operations, reliance on family labour and local resources, low capital endowments, labour-intensive technology, limited barriers to entry, high degree competition, unskilled work forces and acquisition of skills outside the formal education system. Informal businesses usually do not comply with established regulations governing labour practices, taxes and licensing. Source: Virtual Library on Microcredit

Informal Finance System:
"Informal" refers to types of institutions. Most community-based financial institutions are formal organizations, although they are not normally targeted for a particular purpose. While every group exhibits some degree of formality, the term "informal" is used principally to describe traditional systems of savings and loans. Source: Virtual Library on Microcredit.

Informal Savings:
Savings held outside of a formal financial institution. Informal savings mechanisms include saving at home ĀEin cash or kind, savings groups, rotating savings and credit associations (ROSCAs), accumulating credit and savings associations (ASCAs), through reciprocal savings and lending with neighbors or relatives, and with money guards (friends or relatives willing to hold a saverís money for a period) or informal sector deposit collectors (people who charge a fee to hold a saverís money for a determined period). Informal savings devices are often highly convenient but may be unreliable, insecure and/or illiquid. A financial institution should have a solid understanding of the local informal savings market before it attempts to develop savings services for poor people. Source: CGAP

Informal Sector/ Economy:
A subset of the economy consisting of self-owned enterprises and the enterprises of informal employers, in both urban and rural areas. The businesses of the informal sector are not registered with any taxation or regulatory bodies. The main features of the informal sector are ease of entry, self-employment, small-scale production, labor-intensive work, lack of access to organized markets, and lack of access to traditional forms of credit. Source: ACCION

Informal Sector:
Deals with studies on the informal sector and the micro/small enterprise sector inlcuding issues of self-employment. Source: Calmeadow

Informal Sector:
Deals with studies on the informal sector and the micro/small enterprise sector inlcuding issues of self-employment. Source: Calmeadow

Interest Rate Risk:
The risk associated with changes in market interest rates that can harm a financial institutionís profitability. A financial institution exposes itself to interest rate risk when it mobilizes deposits at one interest rate and lends them out at another. For example, an increase in market interest rates on deposits might force a financial institution to immediately increase the interest rate it pays on deposits in order to remain competitive and continue to attract deposits. At the same time, if the institutionís earning assets are concentrated in long-term, fixed-rate loans, it does not have the immediate option of increasing the interest rate it charges on these loans. Because the financial institution cannot increase its interest income from loans as fast as its cost of funds is rising, profitability will decrease and it could even face a shortfall in operating funds. Alternatively, if the market interest rate charged on loans drops, a financial institution could be squeezed since it cannot drop the rate it pays out on deposits below zero; in this case, it may be limited to covering costs with fee income. Institutions that have the capacity and regulatory approval to do so lend on a variable rate basis to reduce interest rate risk by adjusting loan rates as deposit rates change. Source: CGAP

Interest Rate Setting:
This key term is used for resources specifically related to setting interest rates for microfinance products. Source: Calmeadow

Interest rate spread (lending rate minus LIBOR):
Interest rate spread is the interest rate charged by banks on loans to prime customers minus the interest rate paid by commercial or similar banks for demand, time, or savings deposits. The spread over LIBOR (London interbank offered rate) is the interest rate charged by banks on short-term loans in local currency to prime customers minus LIBOR. LIBOR is the most commonly recognized international interest rate and is quoted in several currencies. The average three-month LIBOR on U.S. dollar deposits is used here. Source: The MIX Market

Interest Rate Spread
The difference between the rate the financial institution pays for deposits and the rate it charges for loans. In a financially sustainable institution, this spread is large enough to cover operating costs, the opportunity cost of holding liquid reserves that earn no or low interest, losses in the value of the institutionís assets due to inflation, the cost of provisions for loan and investment losses and capitalization. Source: CGAP

Interim Financing:
Short-term loan to provide temporary financing until more permanent financing is available. Source: Renz and Massarsky

Non- or for-profit institutions that have specialized lending capacities. They obtain capital in the form of equity and low interest loans from a variety of sources, including foundations and other funders, to form a "lending pool." They then serve as "wholesalers" who process large numbers of small loans or investments. This "economy of scale" often allows intermediaries to be more efficient than a foundation or funder could be if it considered each investment individually. Also, intermediaries often develop expertise in a particular field or region that foundations or funders cannot afford to develop. In the context of this study, non-financial intermediaries include community foundations and financial intermediaries include credit unions, venture capital and loan funds, banks, etc. Source: Renz and Massarsky

Internal Controls
Policies and procedures designed to minimize and monitor operational risks, in particular the risks of fraud and mismanagement. Because the unpredictable size and timing of cash deposits make financial institutions particularly vulnerable to fraud and errors, institutions that mobilize deposits must implement rigorous internal control policies and procedures.

Essential controls include: board approval and monitoring of information; rotation and segregation of duties; dual control of safes and vaults; established limits on cash holdings and expenditures; signature requirements; cash management procedures; daily balancing of cash drawers with the general ledger; receipts for all transactions; restricted access to offices and assets; periodic physical inventory of assets and cash counts; internal operational reports that are timely, easy to understand and concise; accounting that complies with local accounting law and is consistent from one period to the next; sequential numbering of documents; an adequate audit trail; a secure management information system; and periodic reconciliation of the general ledger totals with bank statements or other subsidiary ledgers.

Internal controls should be supported by a culture that strongly discourages fraud and mismanagement; documented, clear and concise policies and procedures; job descriptions that clearly allocate responsibilities and accountabilities; transparent accounting practices and an adequate management information system that provides accurate and timely information; effective internal supervision, including routine audits and spot checks; and internal audit functions performed by a qualified individual(s) who reports directly to the board of directors. Source: CGAP

Investment Fund:
Commercial investment in microfinance. Source: Calmeadow

Islamic Communities:
Communities of the Muslim faith (political and/or cultural) that practice Islamic microfinance methodologies regarding entitlement considerations (eg. musharaka, muradaba) because they reject the concept of fixed interest rates. Source: Calmeadow

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Lending Rate:
Lending Rate is the bank rate that usually meets the short and medium term financing needs of the private sector. This rate is normally differentiated according to creditworthiness of borrowers and objectives of financing. Source: The MIX Market

Using long-term debt to secure funds for an organization. In the social investment world, often refers to financial participation by other private, public or individual sources. Source: Renz and Massarsky

Liabilities, Total Liabilities:
Total value of financial claims on a firm's assets. Equals total assets minus net worth. Source: Renz and Massarsky

Limited Liability:
Limitation of shareholders' losses to the amount invested. Source: Renz and Massarsky

Limited Recourse:
Rights only to specifically stipulated assets to satisfy an unpaid debt. Source: Renz and Massarsky

Line of Credit:
Agreement by a bank that a company may borrow at any time up to an established limit. Source: Renz and Massarsky

Linked Deposit:
A deposit in an account with a financial institution to induce that institution's support for one or more projects. By accruing no interest or low interest on its deposit, a foundation essentially subsidizes the interest rate of the project borrowers. Source: Renz and Massarsky

Liquidity Management:
The process of effectively balancing between two requirements: 1) satisfying all cash outflow requests and reserve requirements without having to sell assets at a loss or borrow at a high cost; and 2) holding enough assets in forms that earn sufficient interest to assure that operations are viable.

Financial institutions use tools such as cash flow forecasting and ratio analysis to project future liquidity needs and monitor current liquidity levels. They also arrange reliable options for obtaining liquid funds quickly when needed (a line of credit for example) and for safely investing excess liquid funds at reasonable rates of return.

One ratio used to monitor liquidity levels is the liquidity adequacy ratio, which measures the ability of the financial institutionís liquid cash reserve to satisfy client savings withdrawal demands after meeting all immediate obligations. It is defined as: (Short term-assets ĀEshort-term liabilities) / Savings deposits.

Short-term assets are defined as total liquid assets with a maturity of less than 30 days. Short-term liabilities are defined as total short-term payables due in less than 30 days. Savings deposits are defined as total member deposits (all types). Under normal operating conditions (not considering seasonal demands), the liquidity adequacy ratio should be between 10% and 15% to meet operational liquidity demands without negatively impacting profitability.

Whatever techniques are used, liquidity management policies and procedures should be clearly defined and documented. Source: CGAP

Liquidity Reserve Requirements:
Government regulations mandating the percentage of deposits that a financial institution must set aside as liquid reserves to be able to meet withdrawal demands. The reserve rate affects the viability of the institution in two ways. First, by improving the likelihood that depositors will be able to withdraw their funds when they want to, reserves protect the institution from the risk of a liquidity crisis and insolvency. Second, reserves often earn no or little interest, so if the reserve rate is high, the financial institution must compensate by obtaining a higher return when it invests the rest of its deposits. In some countries, non-bank deposit taking institutions are required to deposit their liquidity reserves in local banks or in a central finance facility. In these cases, the returns are determined by the reinvestment market, and are still likely to be lower than the returns on lending or long-term investments. Source: CGAP

Liquidity Risk:
The risk that a financial institution will not have enough liquid assets to meet the demand for cash outflows, including saving withdrawals, loan disbursements, and payment of operating expenses. A lack of liquidity can put a quick and final end to a financial institutionís efforts to mobilize deposits ĀEand, in the worst case, can cause it to collapse or close. Deposit mobilization requires clients to trust that they will always be able to access their savings when they want or need them. A financial institution invests significant time and resources instilling this trust in clients, but a liquidity crisis can destroy it instantly. Source: CGAP

Loan Agreement:
A written contract between a lender and a borrower that sets out the rights and obligations of each party regarding a specified loan. Source: Renz and Massarsky

Loan Loss Provision Expense:
A non-cash expense that is used to create or increase the Loan Loss Reserve on the balance sheet. The expense is calculated as a percentage of the value of the Gross Loan Portfolio that is at risk of default. Source: The MIX Market

Loan Loss Rate:
Total write-offs divided by active portfolio. The loan loss rate is an indicator to measure unrecovered loans. Source: ACCION

Loan Loss Reserve Ratio (%):
Loan Loss Reserve/ Gross Loan Portfolio. Source: The MIX Market

Loan Loss Reserve:
A provision set aside to cover potential losses. Microfinance organizations often establish a loan loss reserve equal to 2-5% of the value of their active portfolios. Source: ACCION

Loan Loss Reserve:
The portion of the gross loan portfolio that has been expensed (provisioned for) in anticipation of losses due to default. This item represents the cumulative value of the loan loss provision expense, less the cumulative value of loans written off. Source: The MIX Market

Loan Procedures:
Lending policies and procedures, including client selection, paperwork, terms. Source: Calmeadow

Loan Products:
Types of loans with particular sets of terms and conditions, and often for a particular use. Within the field of microfinance, loan products include fixed-asset lending, home improvement loans and solidarity group lending. Source: ACCION

Loans below US$300 (%):
Percentage of the number of loans disbursed below US$300. Source: The MIX Market

Loss Reserves:
That portion of a fund's earnings or permanent capital designated by the board of directors as a reserve against possible loan losses and, as such, unavailable for lending purposes. Generally accepted accounting principles governing for-profit and regulated financial institutions require that loan loss expense be deducted as an annual expense on an accrual basis and that the loan loss reserve be shown as a contra asset reducing loan assets. To date, no accounting convention has been established to govern loan loss reserve accounting for unregulated nonprofit institutions. The technical treatment is to establish the reserve through periodic charges against earnings, and actual losses, when and if incurred, and are charged against the reserve. For balance sheet purposes a loan loss reserve (should) be shown as a deduction from the loan portfolio to suggest that its true economic value should be reduced by the estimated loss exposure. Source: Renz and Massarsky

Management of Information Systems:
The organization of institutional processes (primarily computer-oriented). Source: Calmeadow

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Market Rate:
The rate of interest a company must pay to borrow funds currently. Program-related investments generally are offered at below market rates or at no interest rate. Source: Renz and Massarsky

Communication of products and services to external client population through various means, eg. Advertisements, referrals, publications. Source: Calmeadow

A part of the field of microfinance, microcredit is the provision of credit services to low-income entrepreneurs. Microcredit can also refer to the actual microloan. Source: ACCION

Microcredit is a small amount of money loaned to a client by a bank or other institution. Microcredit can be offered, often without collateral, to an individual or through group lending. Group lending, also known as solidarity lending, is a mechanism that allows a number of individuals to provide collateral or guarantee a loan through a group repayment pledge. The incentive to repay is based on peer pressure; if one person in the group defaults, the other group members make up the payment amount. Individual lending, in contrast, focuses on one client and does not require other people to provide collateral or guarantee a loan. Source: International Year of Microcredit 2005

Microenterprise (and related terms):
A microenterprise is generally a sole proprietorship that has fewer than five employees, has not had access to the commercial banking sector, and can initially utilize a loan of under $15,000. Most of the microenterprises have fewer than three employees, and the majority are operated by the owner alone. A microenterprise development program is generally run by a non-profit organization that provides any combination of credit, technical assistance, training and other business and personal assistance services to microentrepreneurs. A microloan is a very small loan to a microenterprise. Most microloan are under $10,000, with an average loan size of $5,640. Loan terms range from one year to 4.75 years. Programs charge market rates of interest, from eight to 16 percent. Loans are generally secured by non-traditional collateral, flexible collateral requirements or group guarantees. Source: Virtual Library on Microcredit

Microenterprise Development:
Organizations in this category are most concerned about fostering and strengthening a particular microenterprise activity. These may include the non-timber forest subsector, craft/garment subsector, agricultural, small industry and export subsectors.

A small-scale business in the informal sector. Microenterprises often employ less than 5 people and can be based out of the home. Microenterprise is often the sole source of family income but can also act as a supplement to other forms of income. Examples of microenterprises include small retail kiosks, sewing workshops, carpentry shops and market stalls. Source: ACCION

Impact of credit/enterprise interventions on specific microenterprises regarding productivity, use of technology, sustainability, success rates, income levels, sale. Source: Calmeadow

Owner/ proprietor of a microenterprise. Source: ACCION

Microentrepreneurs are people who own small-scale businesses that are known as microenterprises. These businesses usually employ less than 5 people and can be based out of the home. They can provide the sole source of family income or supplement other forms of income. Typical microentrepreneur activities include retail kiosks, sewing workshops, carpentry shops and market stalls. Source: International Year of Microcredit 2005

Microfinance Institution (MFI):
A financial institution - can be a nonprofit organization, regulated financial institution or commercial bank - that provides microfinance products and services to low-income clients. Source: ACCION

Banking and/or financial services targeted to low-and-moderate income businesses or households, including the provision of credit. Source: ACCION

Microfinance refers to loans, savings, insurance, transfer services and other financial products targeted at low-income clients. Source: International Year of Microcredit 2005

The purpose of these organizations is the extension of institutional financial services to those who are not currently serviced. Microfinance includes the provision of credit, savings and increasingly additional financial services such as foreign exchange, insurance and money transfers. . Source: Calmeadow

A developing field of microfinance that provides health insurance and other insurance products to microentrepreneurs and employees in the informal sector. Source: ACCION

Microinsurance is a system by which people, businesses and other organizations make payments to share risk. Access to insurance enables entrepreneurs to concentrate more on growing their businesses while mitigating other risks affecting property, health or the ability to work. Source: International Year of Microcredit 2005

Microloan Funds:
Community loan funds or microcredit revolving funds in North America or Europe. Source: Calmeadow

A loan imparted by a microfinance institution to a microentrepreneur, to be used in the development of the borrower's small business. Microloans are used for working capital in the purchase of raw materials and goods for the microenterprise, as capital for construction, or in the purchase of fixed assets that aid in production, among other things. Source: ACCION

Microsavings are deposit services that allow people to store small amounts of money for future use, often without minimum balance requirements. Savings accounts allow households to save small amounts of money to meet unexpected expenses and plan for future investments such as education and old age. Source: International Year of Microcredit 2005

Monitoring and Reporting:
Management of the organizationís internal processes. This key term is a general catch-all for the following key terms. It is more general than MIS because it deals with issues beyond the technical system of monitoring. Source: Calmeadow

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Negative Covenants:
Statements of actions or events of the borrower must prevent from occurring or existing, for example, additional borrowing without the lender's consent. Source: Renz and Massarsky

Net Asset Value (% 3 year annual average):
Percentage (average) increase or decrease in the NAV over the last 3 years. Source: The MIX Market

Net Asset Value (% increase on previous years):
Percentage increase or decrease Year-over-Year in the NAV. Source: The MIX Market

Net Asset Value (% increase since inception):
Percentage (average) increase or decrease in the NAV since inception. Source: The MIX Market

Net Income (After Taxes and Before Donations):
Net Income (Before Taxes and Donations) less any Taxes paid by the institution. Source: The MIX Market

Net Income (After Taxes and Donations):
Net Income (After Taxes and Before Donations) plus any Donations recognized by the institution. Source: The MIX Market

Net Income (Before Taxes and Donations):
Net Operating Income plus Net Non-operating Income, before Taxes and Donations. Source: The MIX Market

Net Loan Portfolio:
Gross Loan Portfolio less the Loan Loss Reserve. Source: The MIX Market

Net Non-operating Income:
Non-operating Revenue less Non-operating Expense. Source: The MIX Market

Net Operating Income:
Financial Revenue (Total) less all expenses related to the MFIís core financial service operations, including Operating Expense, Financial Expense, and Loan Loss Provision Expense. It does not include Donations, or revenues and expenses from non-financial services. Source: The MIX Market

Net private capital flows:
Consist of private debt and non-debt flows. Private debt flows include commercial bank lending, bonds, and other private credits; non-debt private flows are foreign direct investment and portfolio equity investment. Source: The MIX Market

Net Working Capital:
Current assets minus current liabilities. Source: Renz and Massarsky

Net Worth (Fund Balance in nonprofit. organizations):
Total assets minus total liabilities. Aggregate net value of the organization. Source: Renz and Massarsky

New projected MF Investments next year (US$):
New fund's monies to be invested in the Microfinance sector over the next 12-month period (excluding funds already committed to specific MFIs, but not yet disbursed). Source: The MIX Market

An organization registered as a non profit for tax purposes or some other legal charter. Its financial services are usually more restricted, usually not including deposit taking. These institutions are typically not regulated by a banking supervisory agency. Source: The MIX Market

Non-Bank Financial Institution:
An institution that provides similar services to those of a Bank, but is licensed under a separate category. The separate license may be due to lower capital requirements, to limitations on financial service offerings, or to supervision under a different state agency. In some countries this corresponds to a special category created for microfinance institutions. Source: The MIX Market

Non-conventional finance:
The United Nations has defined non-conventional finance as any financing approach which, by modifying loan terms, guarantees, collateral and/or eligibility requirements, permits low-income households to qualify for and afford housing loans for which they would otherwise be ineligible owing to their limited financial and socio-economic circumstances. UNCHS (Habitat) has added that, in this context, the term "non-conventional" refers to financial mechanisms and not necessarily to institutions. Established institutions, such as building societies, savings and loan associations and housing banks, are likely to have conventional terms for loans. Institutions which are normally or primarily associated with housing finance, such as CBFIs, also have conventional loan terms although many do have various non-conventional techniques. It must also be noted that what is seen as conventional in one country can be non-conventional in another. Source: Virtual Library on Microcredit

Non-operating Expense:
All expenses not directly related to the core microfinance operation, such as the cost of providing business development services or training (unless the MFI includes training as a requirement for receiving loans). Source: The MIX Market

Non-operating Revenue:
All revenue not directly related to core microfinance operations, such as revenue from business development services, training, or sale of merchandise. Source: The MIX Market

Number of Active Borrowers:
The number of individual who currently have an outstanding loan balance with the MFI or are responsible for repaying any portion of the Gross Loan Portfolio. Source: The MIX Market

Number of Active Clients:
Number of individuals who are active borrowers and/or savers with the MFI. A person with more than just one such account (i.e. with a loan and a savings account) is counted as a single client in this measure. Source: The MIX Market

Number of active MF Investments:
Number of active financial and technical (e.g. technical assistance) transactions (including loans & debt securities, equity, grants, guarantees and grants) carried on by the fund with its MFI clients. Source: The MIX Market

Number of Personnel:
The number of individuals who are actively employed by the MFI. This includes contract employees or advisors who dedicate the majority of their time to the MFI, even if they are not on the MFIís roster of employees. Source: The MIX Market

Number of Voluntary Savers:
The total number of individuals who currently have funds on deposit with an MFI, which the MFI is liable to repay. This number applies only to deposits that are held by the MFI, not to those deposits held in other institutions by the MFIís clients. Source: The MIX Market

Number of Women Borrowers:
Number of Active Borrowers who are women. Source: The MIX Market

Operating Expense / Loan Portfolio (%):
Operating Expense / Period Average Gross Loan Portfolio. Source: The MIX Market

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Operating Expense:
Expenses related to operations, such as all personnel expenses, rent and utilities, transportation, office supplies, and depreciation. Source: The MIX Market

Operating Expenses/Period Average Fund Assets:
Fund Operating Expenses/((Beginning year Fund Assets + Year end Fund Assets)/ 2). Source: The MIX Market

Operational Self-Sufficiency (%):
Financial Revenue (Total)/ (Financial Expense + Loan Loss Provision Expense + Operating Expense). Source: The MIX Market

Operational Self-Sufficiency (OSS):
A measure of financial efficiency equal to total operating revenues divided by total administrative and financial expenses. If the resulting figure is greater than 100, the organization under evaluation is considered to be operationally self-sufficient. In microfinance, operationally sustainable institutions are able to cover administrative costs with client revenues. Source: ACCION

Opportunity Cost:
The potential benefit that is foregone from not following the best (financially optimal) alternative course of action. Source: Renz and Massarsky

Opportunity Costs:
In the context of microfinance, opportunity costs include the time or anything "forgone" a borrower spends on applying and filling out the paperwork for a loan. Source: ACCION

Other Revenue Related to Financial Services:
Revenue that is generated from other financial services, such as fees and commissions for non-credit financial services that are not considered Financial Revenue. This item may include revenues linked with lending such as membership fees, ATM card fees, transfer fees, or other financial services such as payment services or insurance. Source: The MIX Market

Active attempt to find/interact with clients in selected populations, geographic catchment areas or targeted initiatives. This term will often relate to impact studies and would also include market research and delinquency studies. Source: Calmeadow

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Passbook Accounts:
Demand deposit accounts that use passbooks rather than checks, ATMs or point of service devices for transactions. Source: CGAP

Peer Lending:
Peer lending relies on the peer pressure of group members to act as a guarantee in place of more traditional forms of collateral and credit scoring. Source: Calmeadow

Performance Standards:
Normative levels set for specific performance measurements, like portfolio quality or leverage. In the field of microfinance, there are several entities and projects attempting to set universal performance standards for MFIs. Source: ACCION

Performance Standards:
Organizational performance indicators/ performance standards. Source: Calmeadow

Period Average Assets:
(Beginning year Total Assets + Year end Total Assets). Source: The MIX Market

Period Average Equity:
(Beginning year Total Equity + Year end Total Equity). Source: The MIX Market

Period Average Gross Loan Portfolio:
(Beginning year Gross Loan Portfolio + Year end Gross Loan Portfolio). Source: The MIX Market

Period Average Personnel:
(Beginning year Personnel + Year end Personnel). Source: The MIX Market

Policy, Regulation. Supervision, Legislation:
This involves all matters that deal with legislation, regulation, supervision and related microfinance policy issues. May include policy issues at the regional and national level (eg. Regarding usury). This section does not include donor or program policy. Source: Calmeadow

Population density (people per sq km):
Population density is midyear population divided by land area in square kilometers. Population is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin. Land area is a countryís total area, excluding area under inland water bodies, national claims to continental shelf, and exclusive economic zones. In most cases the definition of inland water bodies includes major rivers and lakes. Source: The MIX Market

Population growth (annual %):
Annual population growth rate is the exponential change for a given period. Source: The MIX Market

Population, total (millions):
Total population based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin. Source: The MIX Market

Portfolio at Risk > 30 days Ratio (%):
Portfolio at Risk > 30 days/ Gross Loan Portfolio. Source: The MIX Market

Portfolio at Risk > 30 days:
The value of all loans outstanding that have one or more installments of principal past due more than 30 days. This includes the entire unpaid principal balance, including both the past due and future installments, but not accrued interest. It does not include loans that have been restructured or rescheduled. Source: The MIX Market

Portfolio at Risk:
Measurement of the total outstanding balance of loans past due - not late payments or payments not yet due - divided by the active portfolio. A more rigorous manner of assessing portfolio quality than portfolio past due/ delinquent portfolio. Source: ACCION

Portfolio investment, bonds (PPG + PNG) (NFL, current US$):
Portfolio investment flows, bonds, are net and include portfolio debt flows:
bond issues purchased by foreign investors. Source: The MIX Market

Portfolio investment, equity (DRS, current US$):
Portfolio investment flows, equity, are net and include non-debt-creating portfolio equity flows:
the sum of country funds, depository receipts, and direct purchases of shares by foreign investors. Source: The MIX Market

Portfolio Past Due/ Delinquent Portfolio:
Total amount of loan payments that are due but have not yet been paid divided by active portfolio. Source: ACCION

A combination of assets held for its investment benefits, including financial and non-financial returns. The asset mix is usually varied in kind and size to maintain an acceptable level of risk and return. Source: Renz and Massarsky

Postal Outlets:
Postal outlets often offer microfinancial services in Africa.and Europe. Source: Calmeadow

These resources discuss microfinance and relief strategies in a post-war/post-natural disaster stage context when countries are economically vulnerable and unstable. Source: Calmeadow

Poverty gap at $1 a day (%):
Poverty gap is the mean shortfall from the poverty line (counting the nonpoor as having zero shortfall), expressed as a percentage of the poverty line. This measure reflects the depth of poverty as well as its incidence. Population below $1 a day is the percentage of the population living on less than $1.08 a day at 1993 international prices (equivalent to $1 in 1985 prices, adjusted for purchasing power parity). Source: The MIX Market

Poverty headcount, rural (% of population):
Rural poverty headcount is the total number of rural population living below the national poverty line. Source: The MIX Market

Poverty Lending:
Here the focus is on poverty reduction and empowerment of vulnerable groups. Usually, this method attempts to identify the causes of poverty and address them with a range of strategies, one of which would be microfinancial services. The target market is the poorest households in a certain geographic area. Source: Calmeadow

In commercial law, the principal is the amount that is received, in the case of a loan, or the amount from which flows the interest. Source: Renz and Massarsky

Private capital flows, total (% of GDP):
Consist of private debt and nondebt flow. Private debt flows include commercial bank lending, bonds, and other private credits; nondebt private flows are foreign direct investment and portfolio equity investment. This is expressed as a percentage of GDP per capita. Source: The MIX Market

Products and Services:
This includes practical manuals and institutional profiles for management, client monitoring and methodology development. Source: Calmeadow

Profit Margin:
Net Operating Income/ Financial Revenue (Total). Source: The MIX Market

Program-Related Enterprise:
A business or enterprise designed to promote the social purpose goals of an organization as well as generate revenue. Among nonprofits, products and services are usually, but not exclusively, identified with the purpose of the organization. Activities can range from fee-for-service charges to full-scale commercial ventures. Source: Renz and Massarsky

Program-Related Investment:
Broad, functional definition:
A method of providing support to an organization, consistent with program goals involving the potential return of capital within an established time frame. In the context of this study, program-related investments include loans, loan guarantees, equity investments, asset purchases or the conversion of asset(s) to charitable use, linked deposits, and, in some cases, recoverable grants. Source: Renz and Massarsky

Promissory Note:
Promise to pay. Written contract between a borrower and a lender that is signed by the borrower and provides evidence of the borrower's indebtedness to the lender. Source: Renz and Massarsky

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This refers to external rating processes such as CAMEL. This is distinct form of audit which refers to internal review or analysis. Source: Calmeadow

Ratio Analysis:
Financial ratio analysis tool that examines organizational sustainability, efficiency and portfolio quality. Source: Calmeadow

Real interest rate (%):
Real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator. Source: The MIX Market

Accounts receivable; an amount that is owed the business, usually by one of its customers as a result of the ordinary extension of credit. Source: Renz and Massarsky

Refers to the right, in an agreement, to demand payment from the person who is taking on an obligation. A full recourse loan refers to the right of the lender to take any assets of the borrower if repayment is not made. A limited recourse loan only allows the lender to take assets named in the loan agreement. A non-recourse loan limits the lender's rights to the particular asset being financed -- an approach that is common in home mortgages and other real estate loans. Source: Renz and Massarsky

Recoverable Grants:
Funds provided by a philanthropist to fulfill a role similar to equity. A recoverable grant may include an agreement to treat the investment as a grant if the enterprise is not successful, but to repay the investor if the enterprise meets with success. Source: Renz and Massarsky

Regulated Microfinancial Institutions:
Regulated institutions offering microfinancial services such as BancoSol, Mibanco, Grameen Bank, ADEMI. This section would include non-bank financial institutions that are regulated by special laws. Source: Calmeadow

Regulation and Supervision:
The creation and enforcement of a set of rules and standards for financial institutions, including MFIs. These rules are usually set by a country's central bank or superintendency of banks, or by other banking agencies. Source: ACCION

Government laws and rules that govern financial institutions. While credit-only institutions lend out capital belonging to other institutions (second-tier lenders), financial intermediaries, by definition, put the savings of individuals and institutions at risk, since they use them to finance their loan portfolios. For this reason, governments tend to focus their efforts on regulating financial intermediaries that mobilize deposits rather than on financial institutions that provide credit services only.

There are two kinds of regulation: non-prudential and prudential. In non-prudential regulation, the financial sector authority (regulator) does not vouch for or assume responsibility for the soundness of the ďregulatedĀEinstitutions. Non-prudential regulatory techniques may include: registration and legal chartering of licensed entities; disclosure of ownership or control; reporting or publication of financial statements; norms for the content and presentation of such statements; accounting and audit standards; transparent disclosure of interest rates to consumers; external audits; submission of names of borrowers and status of their loans to a central credit information bureau; and interest rate limits. Enforcement of non-prudential regulations seldom involves regular supervision or on-site inspection.

Prudential regulation is generally set out and enforced by the financial sector regulator; it defines detailed standards for financial structure, accounting policies, and other important dimensions of a financial institutionís business. Prudential regulations will include requirements for liquidity, capital adequacy, loan-loss provisioning and loan diversification, as well as limits on delinquency and non-earning assets. Compared to non-prudential regulations, enforcing prudential regulations requires more intensive reporting as well as on-site inspection that goes beyond the scope of normal financial statement audits. Because supervisory resources are often limited, enforcing prudential regulations for a multitude of small institutions can be problematic for regulators. Source: CGAP

1. Money sent by expatriate migrant worker to family in home country. 2. A payment in cash, check or electronic transfer. Source: ACCION

Remittances are transfers of funds from people in one place to people in another, usually across borders to family and friends. Compared with other sources of money that can fluctuate depending on the political or economic climate, remittances are a relatively steady source of funds. Source: International Year of Microcredit 2005

Resource-Dependent Communities:
Primary resource-dependent communities, eg. fishing, forestry communities. These resources discuss microfinance as an alternative to activities that are heavily dependent on natural resources. Source: Calmeadow

A revision of a financial agreement that alters the conditions or covenants of the original agreement. For example, parties may agree to restructure a loan agreement, easing the payment schedule, when a borrower is delinquent or otherwise faces default on a loan. Source: Renz and Massarsky

Return on Assets (%):
(Net Operating Income, less Taxes)/ Period Average Assets. Source: The MIX Market

Return on Equity (%):
(Net Operating Income, less Taxes)/ Period Average Equity. Source: The MIX Market

Risk Management:
A systematic approach to identifying, measuring, monitoring and managing business risks in an institution. Effective risk management includes the following steps:
1) Identify, assess and prioritize risks; 2) Develop strategies to measure risk; 3) Design policies and procedures to mitigate risks based cost/benefit analyses of different measures; 4) Implement and assign responsibility for policies and procedures; 5) Test their effectiveness and evaluate the results; and 6) Revise policies and procedures as needed. The operational risks that financial institutions must manage include credit risk, liquidity risk, interest rate risk, reputation risk, transaction risk (the risk of financial loss due to negligence, mismanagement or errors), and fraud risk. Source: CGAP

Roll Over:
Prior to or at the time of the maturity of an investment or loan, the interested parties agree to continue to carry over the investment or loan for another, successive period of time. Source: Renz and Massarsky

Rotating Savings and Credit Associations (ROSCAs):
Informal savings and credit groups in which each member deposits the same amount of money at the same regular interval; each time members deposit, they give the whole of the amount collected to one member. When there have been as many distributions as there are members, the ROSCA ends. Everyone has put in and taken out the same amount; for example, ten people each save $10 a week, and each week for ten weeks one person walks away with $100. Source: CGAP

Rural Bank:
Banking institution that targets clients who live and work in non-urban areas and who are generally involved in agricultural-related activities. Source: The MIX Market

Savers per Staff Member:
Number of Voluntary Savers/ Number of Personnel. Source: The MIX Market

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Savings / Regular Savings Accounts:
Demand deposit accounts that use passbooks, magnetic stripe or smart cards, ATMs, POS devices or some combination of these for transactions. They do not allow accountholders to use checks. Source: CGAP

Savings / Self-Help Groups:
Found everywhere, but especially in South Asia, savings groups provide their members with a mandatory illiquid savings service coupled with access to loans. Composed of about five to twenty members, each group meets monthly or weekly close to membersĀEhomes. At each meeting all members save the same amount. The groups then lend these savings to members, store them in a lockbox, or deposit them in a group bank account in order to leverage a group loan. If an emergency strikes, members often can access a loan quickly from their groupís emergency fund. Savings groups provide limited but highly convenient services to large numbers of small, rural depositors. Due to their simplicity, they can be promoted by non-governmental organizations (NGOs) that have no expertise in financial intermediation. The NGOs do not usually recover the costs of promoting these groups; however, the groups themselves are financially self-sufficient. Source: CGAP

Savings Banks:
Banks that focus on savings mobilization as their core business. Found worldwide, some of savings banks are public, some are private, and some function as cooperatives. Many are postal savings banks that offer their services through their countriesĀEpost office branch network. Savings banks often have far greater rural outreach than other bank networks and tend to offer products with terms that are more manageable for the poor than typical commercial banks. A recent global study estimated that ďalternative financial institutionsĀE- institutions that reach lower-income clients than those generally served by commercial banks ĀEhold an estimated 570 million deposit accounts worldwide. Postal savings banks alone hold nearly four-fifths of these accounts and non-postal savings banks, which were not included in the global figure, might hold an additional 150 million accounts. Source: CGAP

Savings Development:
Creation and process of client savings schemes (including mandatory savings schemes). Source: Calmeadow

Savings Mobilization:
Programs intending to mobilize the capital of the poor and to provide savings accounts, as well as credit services, to microentrepreneurs and low-income households. Source: ACCION

The process of pooling a group of assets, such as loans or mortgages, and selling securities backed by these assets. Securitization is one way microfinance institutions can access capital markets, improve liquidity and lend more money, all while managing risk. Source: ACCION

A pledge made to secure the performance of a contract or the fulfillment of an obligation. Examples of securities include real estate, equipment stocks or a co-signer. Mortgages are a form of security with strong legal standing, because they are publicly registered following a formal legal procedure. A mortgage gives the lender holding a mortgage security the right to reclaim the asset being financed, if repayment is not made. Source: Renz and Massarsky

Self-Help Groups:
These are organizations that are used as a foundation to formalize credit and savings operations such as trust banks and/or village banks. Source: Calmeadow

Self-sufficiency occurs when a microcredit programme can cover all of its operating expenses (including loan losses and the cost of capital) entirely with internally-generated sources of income. Source: Virtual Library on Microcredit

Senior Debt:
Debt that must be repaid before subordinated debt receives any payment in the event of default. Source: Renz and Massarsky

Small & Medium Scale Enterprises (SMEs):
Enterprises employing 5 to 10 workers (small-scale) or between 10 and 50 workers (medium-scale). Source: ACCION

Software Programs:
Microeconomic/microenterprise/microcredit-specific computer software programs (mostly financial, program planning and accounting-based). Source: Calmeadow

Stepped Lending:
The process by which borrowers who repay loans on time are eligible for increasingly larger loans. Stepped lending keeps initial risk at a minimum while allowing microentrepreneurs to grow their businesses and increase their incomes. Source: ACCION

Street Vendors :
This term focuses on self-employed street vendors such as cart/sidewalk hawkers, market vendors. Source: Calmeadow

Subordinated Debt (Junior Debt):
Debt over which senior debt takes priority. In the event of bankruptcy, subordinated debt-holders receive payment only after senior debt is paid in full. A subordination of security interest in property allows another creditor to have the rights to the proceeds of the sale of that property before the claim of the subordinated creditor. Source: Renz and Massarsky

Subsidized Rates of Interest:
Loan interest rates that are kept artificially low (below market rates) by the lending institution; often subsidized by donations. Source: ACCION

Systematic oversight of deposit-taking financial service providers to make sure that they comply with the regulations governing them, or to close them if they do not. Supervision plays a crucial role in protecting depositors from losses due to mismanagement or fraud. Typically, regulatory agencies have very limited resources yet are responsible for assuring the stability of the countryís financial system. As a result, policy makers must balance systemic risk and the costs of supervision to make the best use of scarce supervisory resources.

The cost of prudential supervision is high relative to the size of most microfinance institutions. This presents a challenge:

how to effectively supervise the microfinance sector to protect the savings of small depositors without placing excessive cost burdens on either the regulator or the microfinance institutions. In many cases, policy makers prioritize the regulation of financial institutions that hold large volumes of deposits and/or accounts for large numbers of the population. Source: CGAP

An organization's ability to cover costs. There are varying degrees of sustainability, ranging from not sustainable to financially sustainable Source: ACCION

Organizational financial and operational self-sustainability meaning the ability to cover costs plus the imputed cost of capital and other expenses; long-term organizational viability. Source: Calmeadow

Sustainability is the ability of a microcredit programme to maintain its operations and continue to provide service to its customers or clients. A Programme is sustainable when a combination of external grants, loans, and internally generated revenues are sufficient to cover all programme expenses over the long term. Source: Virtual Library on Microcredit

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Includes all taxes paid on net income or other measure of profits as defined by local tax authorities. This item may also include any revenue tax. It excludes taxes related to employment of personnel, financial transactions, fixed-assets purchase or other value-added taxes. Source: The MIX Market

Technical Assistance:
Exchange of knowledge, product and services and management technology between technical service providers and microfinancial institutions. Source: Calmeadow

Term / Time Deposit / Certificate / Fixed Deposit:
A savings product in which a client makes a single deposit that cannot be withdrawn for a specified period of time. At the appointed time, the client withdraws the entire amount with interest. The financial institution offers a range of possible terms and usually pays a higher interest rate than on its demand deposit or contractual products. Because they tend to be larger than other types of deposits, have contracted withdrawal times, and involve fewer transactions, time deposits can provide a significant source of relatively low-cost funds that facilitate ALM. This is particularly true if an MFI can attract large and institutional depositors. Source: CGAP

Refers to the maturity or length of time until final repayment on a loan, bond, sale or other contractual obligation. Source: Renz and Massarsky

Total Assets:
Total of all net asset accounts. Source: The MIX Market

Total Equity:
Total of all equity accounts, less any distributions. Source: The MIX Market

Total Liabilities and Equity:
The sum of Total Liabilities and Total Equity. Source: The MIX Market

Total Liabilities:
Total of all liability accounts. Source: The MIX Market

Traditional Finance Schemes:
Pawnbrokers, rotating savings and credit associations, individual savings groups, tontines. Source: Calmeadow

Staff training regarding microcredit methodologies, case management, etc. May be senior staff, field staff or loan officer training. This does not include client training which would be found under business development services. Source: Calmeadow

Transaction Costs:
Imputed costs from organizational operations and activities in relation to client services and other organizational interactions (eg. Processing fees). Source: Calmeadow

Transformation :
Upscaling to non-bank financial intermediary or commercial bank, institutional graduation. Source: Calmeadow

In a microfinance context, transformation refers to the process by which a nonprofit community organization or an NGO becomes a regulated financial institution. Source: ACCION

The degree of a financial institution/ MFI's openness as determined by a sequence of financial information-gathering and testing. A transparent microfinance organization gathers and reports accurate financial information on its own, to be verified and analyzed by external parties. These external authorities ensure that the MFI's performance complies with appropriate industry standards. Source: ACCION

Type of Institution (MFI):
MFIs can be Bank; Cooperative/Credit Union; Non-Bank Financial Institution; Non-Profit (NGO); Rural Bank; Other. Source: The MIX Market

Unbanked describes people who have no access to financial services (services that include savings, credit, money transfer, insurance, or pensions) through any type of financial sector organization such as banks, non-bank financial institutions, financial cooperatives and credit unions, finance companies, and NGOs. Implicit in this definition is that financial services are usually available only to those individuals termed ďeconomically activeĀEor ďbankableĀE Source: International Year of Microcredit 2005

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A non- or for-profit entity that receives a program-related investment directly from a funder for use in its programs or ventures. Source: Renz and Massarsky

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Village banking:
Lending methodology in which clients - typically women - form groups of approximately 10-30 individuals that are autonomously responsible for leadership, bylaws, bookkeeping, fund management and loan supervision. The group pools funds to use for business loans, savings, and mutual support, and members cross-guarantee individual loans. Source: ACCION

Village Banking:
This is a type of lending founded by John Hatch that organizes people into groups based in their communities for lending. Some village banking programs focus on minimalist and other use credit ĎplusĀEschemes (eg. Credit with Education) ĀEprograms that offer additional programmes or components with credit. Source: Calmeadow

Voluntary Savings:
Deposits from the general public and members that are not maintained as a condition for accessing a current or future loan and are held with the institution. Source: The MIX Market

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Statement attesting that certain statements are true. For instance, the borrower may warrant that it is a corporation, that it is entering into the agreement legally and that financial statements supplied to the bank are true. Source: Renz and Massarsky

Willingness to Pay:
The amount a consumer will pay for a particular quantity of a good or service. In consumer demand theory, willingness to pay automatically implies ability to pay. In contemporary social science writing, "ability to pay" is sometimes contrasted with willingness to pay. The implicit assumption here is that even though people are willing and actually do pay a certain amount, they lack the ability to pay because they should have spent this money on something else. Buying the good (e.g., water) results in a loss of consumption of some other good or service and places the purchasers further below some socially defined minimum- consumption standard. Source: Virtual Library on Microcredit

Women Borrowers (%):
Number of Female Borrowers / Number of Active Borrowers. Source: The MIX Market

Workers' remittances, net (BoP, current US$):
The World Bank adheres to international guidelines in defining GNI, and its classification of workers' remittances may therefore differ from national practices. Source: The MIX Market

Workers' remittances, receipt (BoP, current US$):
Workers' remittances are current transfers by migrants who are employed or intend to remain employed for more than a year in another economy in which they are considered residents. Some developing countries classify workers' remittances as a factor income receipt (and thus as a component of GNI [gross national incomeóformerly gross national product, or GNP]). The World Bank adheres to international guidelines in defining GNI, and its classification of workers' remittances may therefore differ from national practices. Source: The MIX Market

Working Capital:
Defined as the difference between current assets and current liabilities, excluding short-term debt. Source: ACCION

Working Capital:
Technically, means current assets and current liabilities. The term is commonly used a synonymous with net working capital. The term often also is used to refer to all short-term funding needs for operations (excluding debt service and fixed assets). A company's investment in current assets that are used to maintain normal business operations. Net working capital, which is the excess of current assets over current liabilities is also interchangeable with working capital. Both reflect the resources in circulation to meet operating needs and obligations as they come due. Source: Renz and Massarsky

Write Off Ratio (%):
Write Offs for the 12-month period / Period Average Gross Loan Portfolio. Source: The MIX Market

Write off:
When an investment, such as a loan, becomes seriously delinquent or in default and is determined to be uncollectible, the lender may choose to charge the outstanding investment amount as an expense or a loss. Source: Renz and Massarsky

Write Offs for the 12-month period:
Total amount of loans written off during the period. A write-off is an accounting procedure that removes the outstanding balance of the loan from the Gross Loan Portfolio and from the Loan Loss Reserve when these loans are recognized as uncollectable. Source: The MIX Market

Charging an asset amount to expense or loss. A microfinance institution writes off loans not expecting to collect them, while continuing to attempt collection. Source: ACCION

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Hari Srinivas - hsrinivas@gdrc.org
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