Global microscope on the microfinance business environment 2012

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7 performance, outreach, deposits and effi ciency of the sector, along with some overall penetration measures. Although it is impossible to capture every dimension of a country’s microfi nance environment, the index provides a means of distinguishing those countries with support for a greater availability of fi nancing options for the poor, from those with considerable work to do. The index also fi lls an important data gap by quantifying the state of the regulatory and operating environment of microfi nance. Lastly, the index is intended to spur dialogue about sound policy and practice that will encourage positive reform in the microfi nance sector. © The Economist Intelligence Unit Limited 2012 <strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012 Each year, we seek to build upon the research process used to construct the index. The 2012 study used the same set of indicators and methodology as the 2011 study, and we also increased our consultations with microfi nance institutions, networks, regulators, consultants, and investors. We again held interviews with a diverse group of stakeholders in order to include recent developments and policy changes in each country. As in previous years, we conducted an online survey to incorporate the views of an expanded community of microfi nance specialists. Lastly, we reached out to a broad range of individual microfi nance networks to gain additional in-country expertise and receive feedback on the study.
8 Microscope indicators The three categories for this index and the indicators into which they are subdivided are as follows: Regulatory Framework and Practices Regulation and supervision of microcredit portfolios Formation of regulated/supervised microcredit institutions Formation/operation of non-regulated microcredit institutions Regulatory and supervisory capacity for microfi nance (including credit and other services) Regulatory framework for deposit-taking Supporting Institutional Framework Accounting transparency Client protection: transparency in pricing Client protection: dispute resolution Credit bureaus Policy and practice for fi nancial transactions through agents Adjustment Factor: Stability Political shock to microfi nance Political stability © The Economist Intelligence Unit Limited 2012 <strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012 Scoring methodology: Each of the fi rst ten scoring criteria are scored from 0 to 4, where 4=best and 0=worst. Once indicator scores have been assigned, these are aggregated to produce an overall scoring range of 0-100, where 100=best. Overall scores and rankings are calculated by attributing a 50% weight to Regulatory Framework and Practices and Supporting Institutional Framework category scores. Finally, a third category, Stability, is added to the index to adjust each country’s score for political instability. This category evaluates political shocks to the microfi nance sector and general political stability, which are combined into an aggregate score between 0 and 100. The index consults the following formula in order to calculate the reduction to the overall score for countries undergoing political instability: Percentage reduction to Supporting Institutional Framework score = [100 - Political Stability] * .25 For a detailed description of the scoring methodology, please refer to the Appendices.
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Cover: Shutterstock 72 Whilst every
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