Global microscope on the microfinance business environment 2012

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Background
The Microscope is a measure of the regulatory and
business environment for microfi nance at the
national level. Created in 2007 by the Economist
Intelligence Unit in co-ordination with the
Multilateral Investment Fund (MIF, a member of
the Inter-American Development Bank Group) and
CAF—development bank of Latin America, the
Microscope takes the form of an index that scores
and ranks country performance against an
objective standard. Consistent with the interests of
the Inter-American Development Bank (IDB) and
CAF, the Microscope focused exclusively on
countries in the Latin America and Caribbean (LAC)
region in 2007 and 2008. Starting in 2009, the
Microscope was expanded to include selected
countries in the rest of the world, which coincided
with the participation of the International Finance
Corporation (IFC) as a commissioning organisation.
The Microscope is an exercise in performance
benchmarking of governments and business
environments at the national level. Its goal is to
identify areas for improvement in microfi nance
regulation, as well as to evaluate conditions that
may be conducive to, or inhibit the growth of,
microfi nance operations. The Microscope is broadly
patterned after other indices that measure the
openness of the regulatory, legal and business
environment to private sector participation. The
best known of these indices is the World Bank’s
Doing Business programme. Unlike Doing Business,
however, there are few quantitative measures of
the microfi nance environment that can serve as
inputs. There are, however, more indicators of
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
Appendix I: Methodology and sources
outcomes in microfi nance, but these are more
properly treated as output measures. For that
reason, the Microscope relies to a large extent on
more qualitative measures of the microfi nance
environment. This places a special obligation on
researchers to design an index that captures
relevant aspects of the environment, and that does
so in a defensible and consistent manner. Despite
insuffi cient and often incomplete data regarding
the microfi nance environment, much effort has
been made to combine available secondary sources
and primary legal texts with insights and
information from sector stakeholders in each
national context.
We fi rst developed the indicators and
methodologies used to evaluate the microfi nance
environment in 2007, in co-ordination with MIF
and CAF. The real-world relevance of these
indicators was evaluated through in-depth
interviews with country experts and microfi nance
practitioners from the LAC region. The indicators
were further validated in 2007 and 2008 by their
high positive correlation with some microfi nance
penetration fi gures. The original index initially
included 15 countries in the LAC region and was
subsequently expanded to an additional 34
countries around the globe, in co-operation with
the IFC. The 2011 and 2012 versions of the index
cover 55 countries.