Measuring Microcredit Delinquency: Ratios Can Be Harmful to Your Health

June, 1999     Richard Rosenberg

Not only can poor ratios mislead donors, they can also obscure urgent problems from MFI managers until it is too late to reverse them. Many an MFI has died of a repayment cancer that could have been cured if it had been detected and dealt with earlier. Meaningful delinquency monitoring is thus a crucial diagnostic tool for MFI management.  However, no single delinquency indicator works well for all MFIs. Most MFIs should track multiple delinquency indicators, because no indicator answers all the relevant questions.