SEARCH

SEARCH BY CITATION

Keywords:

  • G21;
  • G32;
  • G38
  • Assessing credit risks;
  • microfinance industry;
  • microfinance institutions;
  • regulation;
  • East Asia and Pacific;
  • Vietnam

Abstract

This paper discusses credit risk assessment through conventional and specialized credit evaluation metrics. I find that low credit risk is a direct consequence of sound implementation of good governance practices and sustainable financial performance through sound qualitative and quantitative risk management tools. Furthermore, I find that the depth and breadth of outreach and write-off are by some margin the two most important determinant indicators of a microfinance institutions’ (MFI’s) credit risk control. In addition, I demonstrate that there is no significant statistical difference in terms of risk management among the different types of MFIs. Results also suggest that constructive regulation to promote MFIs has a non-negligible impact on the risk assessment of MFIs.