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- 1. Financial transparency as atool for Increasing investments November 15, 2019 Dushanbe, Tajikistan By Farida Abdulhafizova
- 2. 2MFR all rightsreserved 2019 is the only rating agency specialized in certification and inclusive finance with a global coverage: 100+ countries served from 8 offices. MFR Company Profile
- 3. 3MFR all rightsreserved 2019 MFR Company Profile: SERVICES FINANCIAL RATING External Context Governance & Strategy Financial Profile Loan Portfolio Quality Systems & Controls
- 4. 4MFR all rightsreserved 2019 MFR Company Profile: SERVICES SOCIAL RATING Social Performance Management Systems Client Protection & Social Responsibility OutreachQuality of the services
- 5. 5MFR all rightsreserved 2019 MFR Company Profile: SERVICES Appropriate product design and delivery CLIENT PROTECTION PRINCIPLES Prevention of over- indebtedness Mechanisms for complaint resolution Privacy of client data Fair and respectful treatment of clients Responsible pricing Transparency
- 6. 6MFR all rightsreserved 2019 Diverse variety of services and client typologies MFR Company Profile RATING and PRE-RATING SERVICES CERTIFICATIONS SERVICES for INVESTORS SERVICES for REGULATORS Financial Rating • Social Rating • Credit Rating • Mini- assessments • Diagnostics Subscription • Country screening • Deal sourcing• Due diligence• Investment advisory Study • Advisory • Deal sourcing• Training • Supervision Smart Campaign Certification • European Code of Good Conduct SPI4 Audit • SPI4 Alinus • TrueLift • PPI Certification®
- 7. 7MFR all rightsreserved 2019 • MFR is accredited by MFX and TCX to conduct ratings for the purposes of financial service providers accessing affordable hedging products to mitigate foreign exchange risk • MFX and TCX require an external credit rating by MFR with a ranking of at least “Creditworthy” to waive a requirement of MFX to post collateral for a financial institution’s access to the hedging products • MFR and TCX carry out due diligence of MFR to maintain accreditation MFR Company Profile
- 8. 8MFR all rightsreserved 2019 Experience with assessing financial institutions offering Islamic banking products: Training to the Islamic Development Bank, including a training in 2017 on the following topics: • Financial and operational performance and risk profile of financial institutions • Social performance and client protection • Due diligence for investment decisions • Certifications MFR Company Profile
- 9. 9MFR all rightsreserved 2019 As of December 2018, 2,206+ assignments in 101 countries 662 296 572 176 194 213 93 Product diversification Financial Rat ings Social Ratings and assessm ents Credit Ratings Certifications Pre-Rating assessm ents Other assessm ents and advisory services Training services 55% 15% 13% 12% 6% 0 % 20% 4 0 % 60 % Latin Am erica an d Car ib b e an Africa an d M EN A In d u strialized Cou n t ries Cen tral Asia Asia Global out reach MFR Company Profile www.mf-rating.com
- 10. INTRODUCTIONFINANCIAL TRANSPARENCY AS ATOOL TO INCREASE INVESTMENTS
- 11. 11MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS CREDIT = TRUST* *https://www.etymonline.com/search?q=credit
- 12. 12MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 13. 13MFR all rightsreserved 2019 Financial transparency: WHY? BOOST YOUR GROWTH THROUGH MONITORING AND BENCHMARKING IMPROVE CUSTOMER SERVICE INCREASE FUNDING INCREASE FINANCIAL INCLUSION FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 14. 14MFR all rightsreserved 2019 Financial transparency: WHY? BOOST YOUR GROWTH THROUGH BENCHMARKING IMPROVE CUSTOMER SERVICE INCREASE FUNDING INCREASE FINANCIAL INCLUSION FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS - What is the size of the loan portfolio of the overall financial sector? - What share of that portfolio is held by non-banking sector? - What is the delinquency rate for the financial market and that for MFIs? - How is the portfolio distributed among administrative divisions of the country? - What share of the market is held by top players? - What is a typical average loan size? How does performance of my investee compare to that of the peers or of the market?
- 15. 15MFR all rightsreserved 2019 Financial transparency: WHY? BOOST YOUR GROWTH THROUGH BENCHMARKING IMPROVE CUSTOMER SERVICE INCREASE FUNDING INCREASE FINANCIAL INCLUSION Source: https://www.imf.org/external/pubs/ft/fandd/2013/12/brandao.htm) FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 16. 16MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY AS A TOOL TO RAISE INVESTMENT SENTIMENT Financial transparency: WHY? BOOST YOUR GROWTH THROUGH BENCHMARKING IMPROVE CUSTOMER SERVICE INCREASE FUNDING INCREASE FINANCIAL INCLUSION Source: https://www.imf.org/external/pubs/ft/fandd/2013/12/brandao.htm)
- 17. 17MFR all rightsreserved 2019 Financial transparency: WHY? BOOST YOUR GROWTH THROUGH BENCHMARKING IMPROVE CUSTOMER SERVICE INCREASE FUNDING INCREASE FINANCIAL INCLUSION - Non-transparent corporate entities are more prone to investor sentiment (Firth, M., Wong, K. P., & Wong, S. M. L. (2015). Corporate transparency and the impact of investor sentiment on stock prices. Management Science, 61(7), 1630-1647. doi: 10.1287/mnsc.2014.1911) FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 18. 18MFR all rightsreserved 2019 Financial transparency: WHY? BOOST YOUR GROWTH THROUGH BENCHMARKING IMPROVE CUSTOMER SERVICE INCREASE FUNDING INCREASE FINANCIAL INCLUSION FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS Higher transparency allowed customer to make more informed decisions that leads to higher competition and lower % rates
- 19. 19MFR all rightsreserved 2019 Financial transparency: WHY? BOOST YOUR GROWTH THROUGH BENCHMARKING IMPROVE CUSTOMER SERVICE INCREASE FUNDING INCREASE FINANCIAL INCLUSION FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 20. 20MFR all rightsreserved 2019 Financial transparency tools MIS ExternalAudit InternalControl Performance Measurement Benchmarking Performance reporting standards Rating Supervision Consultants (national/international) IT service providers (national/international) Auditors CAMEL PEARLS Other assessme nt tools ATLAS AMFOT? Union of Banks? Informal exchange of data? CGAP, SEEP Rating agencies (Specializ ed and Mainstrea m) NBT, Monitorin g services ATLAS Source: Access for all: building inclusive financial systems / Brigit Helms, 2006 FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 21. 21MFR all rightsreserved 2019 Financial transparency: COSTS FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 22. 22MFR all rightsreserved 2019 Financial transparency: HOW FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 23. 23MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS
- 24. 24MFR all rightsreserved 2019 COVERAGE FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS 1000 FSPs and 70 countries https://data.atlasdata.org/vue/data-subscription
- 25. 25MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS • Data can be provided by individual FSPs or by the professional association. • Data can be provided anytime during the year and are uploaded maximum one month after reporting if they are consistent. • Data can be reported for a single period (e.g. fiscal year 2019) or for multiple periods (e.g. last 3 fiscal years). • Data for a given year (e.g. 2019) start to be available during the same year (e.g. the data as of Mar 2019 reported in May 2019 are uploaded in June 2019) HOW DOES IT WORK?
- 26. 26MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS Data submission tool
- 27. 27MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS Data submission tool
- 28. 28MFR all rightsreserved 2019 FINANCIAL TRANSPARENCY AS A TOOL TO INCREASE INVESTMENTS Examples of use OPTION 1 OPTION 2 Benchmark for association Overview: Global or regional benchmark Detailed: any benchmark, chosen by the association APR FSP 1, FSP2, etc Region FSP 1 % PAR30 GlobalFSP 2 Association RegionFSP 1 % PAR30 IndividualFSP 2 Association Mediu m size APR FSP 1, FSP2, etc Sub-Region
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