Over-Indebtedness Transparency Blog

Please join an interactive online discussion forum (at the bottom of this page) beginning May 13, 2014 following the release of two new publications analyzing the causes, risks, and potential remedies regarding over-indebtedness in the microfinance industry.

An overview and links to the two papers are below:

Over-Indebtedness: A Risk Management Approach This paper suggests practical steps that MFIs can take to reduce the likelihood of over-indebtedness risk occurring, addressing the following areas:

  • What are the leading indicators of over-indebtedness?
  • What steps can MFIs take to avoid over-indebting their clients? What are the risk mitigants and controls that will reduce the likelihood of MFIs being affected should over-indebtedness hit the wider market?

Over-Indebtedness: A Risk Management Approach  April 2014 Download PDF
El Sobreendeudamiento: Abordando la Gestion de Riesgos April 2014 Download PDF

Over-Indebtedness in Mexico: Its Effect on Borrowers  This paper serves as a companion to Over-Indebtedness: A Risk Management Approach, specifically studying over-indebtedness in Mexico. The socially responsible lending community is committed to preventing a debt crisis in Mexico, similar to those that have caused major upheavals in other countries.

Microfinance CEO Working Group member FINCA International researchers engaged with branch managers of their Mexico Subsidiary to study over-indebtedness, with the aim of establishing some of the issue’s dimensions and uncovering client pathways to debt. The research combined three methods: a review of credit bureau data from a pool of loan applicants, a survey of branch managers, and qualitative interviews with borrowers themselves, most of whom were experiencing or had experienced debt problems.

Over-Indebtedness in Mexico: Its Effect on Borrowers April 2014 Download PDF
El Sobreendeudamiento en México: Sus Efectos en los Prestatarios April 2014 Download PDF

Our online discussion forum will begin on this page on Tuesday, May 13, 2014. Comments will close on Friday, May 30, 2014.

Discussion Guidelines: We hope to host a fruitful, lively discussion on the topic of over-indebtedness, guided by the Over-Indebtedness: A Risk Management Approach and Over-Indebtedness in Mexico: Its Effect on Borrowers publications. The forum will be hosted by the Microfinance CEO Working Group, and we invite all registered participants to contribute posts with a maximum of 300 words. Posts will be moderated, but not edited or censored. Participants will be asked to provide their full name, affiliated organization, and email address (unpublished) upon registration. To keep the discussion open and transparent, anonymous posts are not permitted. There is no limit to the number of posts per participant. The moderator reserves the right to delete posts that are not relevant to the discussion. This is a forum for professionals and we ask participants to maintain respect for dissenting opinions and to refrain from attacks, rants, and inappropriate language. Posts represent the opinions of the submitting participant and not those of the Microfinance CEO Working Group.

If you need assistance with registration or have any other questions, please contact Maura Hart.