risk management framework for micro

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1、RiskManagementFrameworkforMicro【Abstract】Themicro-financeindustryhasbeengrostocontinue,giventheexistenceofmassiveunservedandunderservedmarket.FIsisstillnotastocontinuetoseekgrouchattentiontoinherentrisks.Increasingly,manyMFIsappeartoneglecteventhebasiccreditriskmanagementachievehi

2、ghgroent;Micro-financeInstitutions　　0.Introduction　　Micro-financefocusesonprovidingcreditandotherfinancialservicestopeopleall,loalbusinesses.Manyoftheseindividualsareconsidered“not-bankable”bytraditionalmercialbanksastheymaylackcredithistoryandthereforecannotmeetminimumqualificati

3、onstogainaccesstocreditfrommainstreammercialbanks.Micro-financeinstitutions(MFIs)addresstheirtargetcustomers’lackofcredithistorybyusingadetailedprocesstoevaluateborroethodenablesMFIstosuccessfullyevaluatetheirpotentialclients,itistimeconsumingandnoteasilyscalableorefficient.FIscan

4、supportthecreditevaluationprocessandimprovetheirportfolioquality.Thisarticlegivesanovervieicro-financerisksandriskmanagementframeplementedbytheMFIs.　　1.MFIsRisks　　RiskinthecontextofMFIsisthepossibilityofanadverseeventoccurringanditspotentialfornegativeimplicationsonthefutureineofa

5、nMFIordeviationfromtheoriginalsocialmissionofanMFI.LookingatthemissionstatementsofdifferentMFIsglobally,theirmainobjectivecanbesummarizedas:providingfinancialreliefforasignificantproportionofthepoverty-riddenpopulationintheregionsinaintainingfinancialself-sufficiencyinordertoprovi

6、desustainedandefficientservicestotheclients.ThismeansMFIshavebothsocialmissionandfinancialreturnobjective.Strikingabalancebetofrisks.　　Thesourcesoftheserisksincludeincreasedpetitioninthemarket,additionofnestructures,shifttoindividuallending,increasedscaleofoperations,andgeographic

7、alexpansionandeffortstodeepentheirreach.Tobetterexplaintheserisks,theyarecategorizedintothreenamely;financialrisks,operationalrisksandstrategicrisks.　　1.1FinancialRisks　　FinancialrisksofMFIsarebroad.Theyinclude;　　Creditriskistherisktoearningsorcapitalduetoborroentofloanobligations

8、asentobligationstoMFIse.g.banksan