MICROFINANCE PUBLICATION ROUND-UP: Curbing Debt Stress, Social Performance in Mexico, UN Human Development Report: The Rise of the South

“Regulatory Options to Curb Debt Stress;” by Gabriel Davel; published by CGAP (Consultative Group to Assist the Poor); March 2013; 29 pages; available at: http://www.cgap.org/publications/regulatory-options-curb-debt-stress

This report highlights how the dynamics of credit markets can lead to cycles of credit growth and accumulation of consumer debt followed by widespread default and contraction. Because consumers in developing economies are gaining greater access to various forms of finance, such as microfinance, the author “proposes a policy and regulatory approach for early-stage and high-growth credit markets,” which is intended to address the risks of debt stress without restricting the expansion of financial inclusion. The author argues that in order to prevent reckless lending practices and debt stress governments should implement “appropriate monitoring mechanisms and regulatory interventions at an early stage in credit market development.” The report presents the importance of curbing lender practices such as undisclosed fees or charges, penalties on arrears and unsolicited credit offers. Because regulation can inhibit the growth of financial inclusion, Mr. Davel highlights the need for greater financial literacy, improved market infrastructure such as credit bureaus and increased access to debt counseling and restructuring.

“State of Social Performance in Mexico;” by Mike Krell; published by Microfinance Information Exchange (MIX); March 2013; 9 pages; available at: http://www.themix.org/publications/mix-microfinance-world/2013/03/Mexico-development-2013

This Microfinance Information Exchange (MIX) report examines the social performance (SP) of microfinance institutions (MFIs) in Mexico. As of fiscal yearend 2011, the 41 Mexican MFIs with SP profiles on the MIX Market website collectively represent approximately 5.6 million active borrowers, USD 1.8 billion in outstanding loans and 182,000 voluntary savers with USD 63 million in deposits. Though many MFIs have SP profiles on the MIX Market website, a significant portion of them report amounts of SP data that are deemed insufficient. The author suggests that the most significant SP management challenge facing Mexican MFIs “is that of tracking outcomes associated with institutional development goals,” most notably poverty reduction, employment generation, growth of existing businesses and gender equality. While 13 percent of MFIs in Latin America and the Caribbean reported the outcomes of their poverty reduction goals to MIX, zero Mexican MFIs reported this data.

“2013 Human Development Report – The Rise of the South: Human Progress in a Diverse World;” published by the United Nations Development Program (UNDP); March 2013; 216 pages; available at: http://hdr.undp.org/en/

This report presents an analysis of the advancement of human development in the developing world as measured by the Human Development Index (HDI), which incorporates life expectancy, educational attainment and command over the resources necessary for a “decent living.” The report highlights that a large number of countries including Bangladesh, Brazil, Chile, China, India, Indonesia and South Africa, have “risen at unprecedented speed and scale,” in what the authors call the “Rise of the South.” While these countries as well as others are enhancing global economic growth, increasing wealth and reducing poverty, they still are home to some of the largest numbers of the world’s poorest people and face a multitude of barriers such as growing inequality and environmental challenges. The report argues that programs and policies promoting greater investment in public health, social welfare, education and social development are essential for the continued progress of developing countries and global economic growth. In considering the economic slowdown of the North since the 2008 financial crisis in light of the economic strengths of the South, the authors conclude that “the South still needs the North, but increasingly, the North also needs the South.”

By Sam Allmendinger, Research Associate

Sources and Additional Resources:

“Regulatory Options to Curb Debt Stress,”
http://www.cgap.org/publications/regulatory-options-curb-debt-stress

“State of Social Performance in Mexico,”
http://www.themix.org/publications/mix-microfinance-world/2013/03/Mexico-development-2013

“Human Development Report 2013 – The Rise of the South: Human Progress in a Diverse World,” http://hdr.undp.org/en/

MicroCapital Universe Profile: CGAP (Consultative Group to Assist the Poor)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29

MicroCapital. January 13, 2012, “MICROCAPITAL BRIEF: Microfinance Information Exchange (MIX) Releases 2010 Latin America & the Caribbean Regional Snapshot,”
https://www.microcapital.org/microcapital-brief-microfinance-information-exchange-mix-releases-2010-latin-america-the-caribbean-regional-snapshot/

“Latin American and the Caribbean Microfinance Market Trends 2006-2011,”
http://www.themix.org/publications/mix-microfinance-world/2012/06/latin-american-and-caribbean-microfinance-market-trends-

MicroCapital Universe Profile: United Nations Development Program (UNDP)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+Nations+Development+Program+%28UNDP%29

MicroCapital. March 8, 2013, “MICROFINANCE PUBLICATION ROUND-UP: The Role of Business in Society; Life Microinsurance in Mexico; Social Performance Report for India,” https://www.microcapital.org/microfinance-publication-round-up-the-role-of-business-in-society-life-microinsurance-in-mexico-social-performance-report-for-india/

MicroCapital. March 25, 2013, “MICROFINANCE PUBLICATION ROUND-UP: Microfinance and Patriarchy, Connecting the World’s Poorest People to the Global Economy, “Best Practices” in Serving Small Businesses,” https://www.microcapital.org/microfinance-publication-round-up-microfinance-and-patriarchy-connecting-the-worlds-poorest-people-to-the-global-economy-best-practices-in-serving-small-businesses/

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