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Microfinance Information Exchange 
Balancing the Double Bottom Line 
Synergies and Trade-offs Between Performance Types 
1...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
100% 
90% 
80% 
70% 
60% 
50% 
40% 
30% 
20% 
10% 
This presentation is the proprietary and/or confidential information of...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
3% 3% 
10% 
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MI...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
? 
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any di...
Hypothesis: 
MFIs with staff incentives tied to specific performance areas will 
show better performance in these areas re...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
? 
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any di...
Hypothesis: 
MFIs with higher rates of staff turnover will show higher operating 
expense ratios and lower borrower retent...
* Staff turnover rate is negatively correlated with average salary. 
This presentation is the proprietary and/or confident...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
? 
* Staff turnover rate is negatively correlated with average salary. 
This presentation is the proprietary and/or confid...
Hypothesis: 
MFIs with higher borrower retention will have lower risk profiles 
and have lower rates of staff turnover (pr...
* Staff turnover rate is negatively correlated with average salary and borrower retention rate is 
positively correlated w...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
? 
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any di...
Hypothesis: 
MFIs with equality HR policies will have greater proportions of female 
board/staff. MFIs with more female bo...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
? 
* Staff turnover rate is negatively correlated with average salary and borrower retention rate is 
positively correlate...
Hypothesis: 
(1), (2), (3), and (4) will be positively correlated with each other and 
This presentation is the proprietar...
* Staff turnover rate is negatively correlated with average salary and borrower retention rate is 
positively correlated w...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
* Staff turnover rate is negatively correlated with average salary and borrower retention rate is 
positively correlated w...
Hypothesis: 
MFIs with standing SP committees on their board will show higher 
levels of SP outcome reporting. 
This prese...
* Staff turnover rate is negatively correlated with average salary and borrower retention rate is 
positively correlated w...
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any disse...
MIX Global and Project Partners 
MIX partners with a dedicated group of industry leaders: 
This presentation is the propri...
Microfinance Information Exchange 
Visit us on the Web: 
www.themix.org  www.mixmarket.org 
Contact us: info@themix.org 
...
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MIX Microcredit Summit Campaign Presentation

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MIX's Presentation "Balancing the Double Bottom Line" from the 2014 Microcredit Summit Campaign.

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MIX Microcredit Summit Campaign Presentation

  1. 1. Microfinance Information Exchange Balancing the Double Bottom Line Synergies and Trade-offs Between Performance Types 17th Microcredit Summit Mérida, Mexico September 5, 2014 The Premier Source for Microfinance Data and Analysis This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited.
  2. 2. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 2 Goals of MIX’s study  Test industry consensus about the value of social performance management (SPM) and its interaction with financial performance  Continue to build business case for robust SPM  Explore MIX’s combined data set and identify areas for deeper analysis  Follow up to a 2010 MIX study* (“Synergies and Trade-offs”) because MIX’s SP dataset has grown significantly * Based on 2008 data
  3. 3. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 3 MIX/SPTF SP indicator categories INDICATOR CATEGORY WHAT THE INDICATORS MEASURE Mission and social goals The MFI’s stated commitment to its social mission, its target market, and development objectives Governance The board of directors’ (BoD) level of engagement with SPM Range of products and services Financial and nonfinancial products and services offered by the MFI Client outreach by lending methodology Number of active borrowers by lending methodology Borrower retention The MFI’s borrower retention rate Social responsibility to clients MFI implementation of the Smart Campaign Client Protection Principles Transparency of costs of services to clients How the MFI states its lending interest rate(s) Human resources and staff incentives The MFI's policies regarding social responsibility to staff, staff gender composition, staff turnover rate, and staff incentives linked to social performance goals Employment creation and enterprises financed Business development and job creation outcomes Social responsibility to the environment MFI policies and initiatives in place to promote environmentally friendly practices and mitigate environmental impacts of financed enterprises Poverty outreach Client poverty level outcomes
  4. 4. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 4 Current goals versus outcome reporting 0% Poverty reduction* Existing business growth Employment generation Gender equality and women's empowerment* Start-up development Percent of MFIs citing goal Percent of MFIs citing goal and reporting outcomes * Proxy outcome indicators Outcome data is FY12 except poverty data which is FY10–12; n = 965
  5. 5. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 5 Study methodology  Overall sample of 974 MFIs but no. of obs. varies by indicator  Quantitative data mostly FY11 but occasionally supplemented with prior years where no. of obs. was too small (e.g. client poverty data)  Quantitative data from FY12 was also used in a very small number of instances  13 social performance and 12 financial performance variables were analyzed  Various correlation methods used due to heterogeneity of data and type of relationship observed
  6. 6. 3% 3% 10% This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 6 MFI sample characteristics 37% 33% 17% 7% NGO NBFI Credit Union / Cooperative Bank Rural Bank Other 29% 19% 20% 19% 3% Latin America and The Caribbean Eastern Europe and Central Asia South Asia Africa East Asia and the Pacific Middle East and North Africa MFI SAMPLE BY LEGAL STATUS • Mostly NGOs and NBFIs (70%) • Banks and rural banks make up around 10% total MFI SAMPLE BY REGION • LAC slightly overrepresented • EAP slightly underrepresented • MENA very underrepresented
  7. 7. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 7 Select findings: staff incentives Research question: Is there a correlation between the existence of specific HR staff incentives and other process or performance indicators? Hypothesis: MFIs with staff incentives tied to specific performance areas will show better performance in these areas relative to MFIs without such incentives
  8. 8. ? This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 8 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) Portfolio quality (PAR30 and PAR90) Efficiency (operating cost as % of portfolio) Synergy Trade-off Inconclusive
  9. 9. Hypothesis: MFIs with staff incentives tied to specific performance areas will show better performance in these areas relative to MFIs without such incentives This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 9 Select findings: staff incentives Research question: Is there a correlation between the existence of specific HR staff incentives and other process or performance indicators? Synergies: • Portfolio quality incentives correlated with lower PAR30 (average 3.2% lower) • Client retention incentives correlated with better client retention (average 4.3% higher) Trade-offs: • Growth incentives (“attract new clients from target market”) correlated with fewer borrowers per loan officer (average 66 fewer borrowers per loan officer)
  10. 10. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 10 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + Efficiency (operating cost as % of portfolio) Synergy Trade-off Inconclusive
  11. 11. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 11 Select findings: staff turnover Research question: Is staff turnover correlated with efficiency indicators? Hypothesis: MFIs with higher rates of staff turnover will show higher operating expense ratios and lower borrower retention (previous MIX finding)
  12. 12. ? This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 12 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + Efficiency (operating cost as % of portfolio) Synergy Trade-off Inconclusive
  13. 13. Hypothesis: MFIs with higher rates of staff turnover will show higher operating expense ratios and lower borrower retention (previous MIX finding) This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 13 Select findings: staff turnover Research question: Is staff turnover correlated with efficiency indicators? Synergies: • Staff turnover negatively correlated with borrower retention • Staff turnover positively correlated with PAR30 and PAR90 Trade-offs: • Staff turnover negatively correlated with average staff salary
  14. 14. * Staff turnover rate is negatively correlated with average salary. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 14 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + + Efficiency (operating cost as % of portfolio) -* Synergy Trade-off Inconclusive
  15. 15. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 15 Select findings: borrower retention Research question: Is borrower retention correlated with efficiency or risk indicators? Hypothesis: MFIs with higher borrower retention will have lower risk profiles and have lower rates of staff turnover (previous MIX finding)
  16. 16. ? * Staff turnover rate is negatively correlated with average salary. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 16 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + + Efficiency (operating cost as % of portfolio) -* Synergy Trade-off Inconclusive
  17. 17. Hypothesis: MFIs with higher borrower retention will have lower risk profiles and have lower rates of staff turnover (previous MIX finding) This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 17 Select findings: borrower retention Research question: Is borrower retention correlated with efficiency or risk indicators? Synergies: • Borrower retention negatively correlated with staff turnover • No significant relationship found between borrower retention and PAR30 or PAR90 Trade-offs: • Borrower retention positively correlated with average staff salary (likely via staff turnover)
  18. 18. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is positively correlated with average salary. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 18 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + + Efficiency (operating cost as % of portfolio) -* +* Synergy Trade-off Inconclusive
  19. 19. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 19 Select findings: gender balance of management/board Research question: Do equality HR policies promote gender balance within an organization? (Are higher proportions of female board/staff correlated with gender differences in social or financial performance?) Hypothesis: MFIs with equality HR policies will have greater proportions of female board/staff. MFIs with more female board/staff will show better gender performance.
  20. 20. ? This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 20 Summary of SP-SP correlations Staff incentives Staff turnover Presence of female staff Borrower retention rate + - Equality in HR policy Women’s outreach Synergy Trade-off Inconclusive
  21. 21. Hypothesis: MFIs with equality HR policies will have greater proportions of female board/staff. MFIs with more female board/staff will show better gender performance. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 21 Select findings: gender balance of management/board Research question: Do equality HR policies promote gender balance within an organization? (Are higher proportions of female board/staff correlated with gender differences in social or financial performance?) Synergies: • No significant relationship found between equality HR policies and gender balance • Weak positive correlation between female staff and women borrower outreach (LAC only) Trade-offs: [none]
  22. 22. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 22 Summary of SP-SP correlations Staff incentives Staff turnover Presence of female staff Borrower retention rate + - Equality in HR policy Women’s outreach +* * Weak positive correlation between presence of women in staff/board and higher women borrower outreach for LAC dataset only. We are currently performing this analysis for the global dataset. Synergy Trade-off Inconclusive
  23. 23. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 23 Select findings: poverty targeting Research question: Is there a correlation between (1) poverty reduction as a goal, (2) MFIs offering products designed specifically for the poor, (3) ability to report poverty data, (4) number of clients below poverty, and (5) provision of consumption loans? (What about with other financial/operational indicators?) Hypothesis: (1), (2), (3), and (4) will be positively correlated with each other and negatively correlated with (5).
  24. 24. ? * Staff turnover rate is negatively correlated with average salary and borrower retention rate is positively correlated with average salary. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 24 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + + Efficiency (operating cost as % of portfolio) -* +* Synergy Trade-off Inconclusive
  25. 25. Hypothesis: (1), (2), (3), and (4) will be positively correlated with each other and This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 25 Select findings: poverty targeting Research question: Is there a correlation between (1) poverty reduction as a goal, (2) MFIs offering products designed specifically for the poor, (3) ability to report poverty data, (4) number of clients below poverty, and (5) provision of consumption loans? (What about with other financial/operational indicators?) Synergies: • MFIs with a specific poverty target have lower PAR30 (average 2.5% lower) Trade-offs: • Reporting poverty levels negatively correlated with consumption loans • MFIs without a specific poverty focus are more efficient (average operating expenses/GLP 7% lower) and higher ROA (average 2.2% higher) negatively correlated with (5).
  26. 26. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is positively correlated with average salary. ** MFIs without a specific poverty focus exhibit a higher level of efficiency. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 26 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + + - Efficiency (operating cost as % of portfolio) -* +* +** Synergy Trade-off Inconclusive
  27. 27. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 27 Select findings: governance Research question: Do MFIs with a stronger level of board commitment to SPM demonstrate differences in process or performance indicators? Hypothesis: MFIs with standing SP committees on their board will show higher levels of SP outcome reporting.
  28. 28. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is positively correlated with average salary. ** MFIs without a specific poverty focus exhibit a higher level of efficiency. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 28 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - Portfolio quality (PAR30 and PAR90) + + - Efficiency (operating cost as % of portfolio) -* +* +** Synergy Trade-off Inconclusive ?
  29. 29. Hypothesis: MFIs with standing SP committees on their board will show higher levels of SP outcome reporting. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 29 Select findings: governance Research question: Do MFIs with a stronger level of board commitment to SPM demonstrate differences in process or performance indicators? Synergies: • Standing SP committees are positively correlated with borrowers per loan officer (average of 75 more clients)* Trade-offs: [none] * MIX’s desk review experience leads us to think that this difference is probably due more to the presence of an SP champion at the board level.
  30. 30. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is positively correlated with average salary. ** MFIs without a specific poverty focus exhibit a higher level of efficiency. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 30 Summary of SP-FP correlations Staff incentives Staff turnover Borrower retention rate Poverty targeting SP committee (SP champion) Productivity (borrowers per loan officer) - + Portfolio quality (PAR30 and PAR90) + + - Efficiency (operating cost as % of portfolio) -* +* +** Synergy Trade-off Inconclusive
  31. 31. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 31 Key findings Human resources: • Staff incentives linked to portfolio quality and borrower retention associated with better outcomes in those areas • Higher staff turnover associated with higher risk (PAR30 and PAR90), with lower borrower retention, and with higher operating expense (average salary) Poverty targeting: • Poverty targeting associated with lower risk (PAR30) • Poverty targeting associated with lower efficiency/ROA • Client poverty reporting associated with not providing consumer loans Governance: • Strong board commitment to SP associated with better productivity (borrowers per loan officer)
  32. 32. MIX Global and Project Partners MIX partners with a dedicated group of industry leaders: This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 32
  33. 33. Microfinance Information Exchange Visit us on the Web: www.themix.org  www.mixmarket.org Contact us: info@themix.org Interested in learning more about MIX? Sign up to receive our free e-mail newsletters! Find us on Facebook Follow us on Twitter: @mix_market Regional Offices: Baku, Azerbaijan 44 J. Jabbarli st. Caspian Plaza I, 5th Floor, Baku, Azerbaijan Lima, Peru Jirón León Velarde 333 Lince, Lima 14, Perú Dakar, Senegal Villa n°4, rue YF-632, cité Ablaye Thiam Ouest-Foire, Dakar-Sénégal Hyderabad, India Road #12, Landmark Building, 5th Floor, Banjara Hills, Hyderabad 500034, India This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited. 33 Headquarters: 1901 Pennsylvania Ave., NW, Suite 307 Washington, D.C. 20006 USA

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