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Over-indebtedness and microfinance: Constructing an early warning index


Kappel, Vivien; Krauss, Annette; Lontzek, Laura (2010). Over-indebtedness and microfinance: Constructing an early warning index. Zürich: University of Zurich-Center for Microfinance.

Abstract

This study examines a method to collect and explore data on the conditions that could lead to crises due to microfinance clients’ over-indebtedness. A simplified version of one of the main approaches to early warning systems, the “signaling approach”, is proposed to construct a composite index for predicting over-indebtedness crises in the microfinance industry. The index is built for a sample of 13 countries, among them countries where overindebtedness crises and other repayment occurred in the past. Data stems from a triangulation of primary and secondary data sources. The sample results in a preliminary classification of the countries according to their current risk for an over-indebtedness crisis. The study suggests the proposed preliminary composition of the index and makes recommendations on the data collection for further validation of the index before it is expanded to a larger set of countries.

This study examines a method to collect and explore data on the conditions that could lead to crises due to microfinance clients’ over-indebtedness. A simplified version of one of the main approaches to early warning systems, the “signaling approach”, is proposed to construct a composite index for predicting over-indebtedness crises in the microfinance industry. The index is built for a sample of 13 countries, among them countries where overindebtedness crises and other repayment occurred in the past. Data stems from a triangulation of primary and secondary data sources. The sample results in a preliminary classification of the countries according to their current risk for an over-indebtedness crisis. The study suggests the proposed preliminary composition of the index and makes recommendations on the data collection for further validation of the index before it is expanded to a larger set of countries.

Additional indexing

Item Type:Published Research Report
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:2010
Deposited On:16 Apr 2013 11:33
Last Modified:05 Apr 2016 16:28
Publisher:University of Zurich-Center for Microfinance
Free access at:Official URL. An embargo period may apply.
Official URL:http://www.cmf.uzh.ch/publications/Microfinance%20and%20OID%20-%20full%20version.pdf
Related URLs:http://www.responsability.com/site/index.cfm?id_art=66171&vsprache=EN
Other Identification Number:merlin-id:7867

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