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Financial Analysis for Regulators and Donors

Faculty:

Yaron, Jacob

Language

English

Programs:

Boulder MFT

Description

This course is designed for employees of central banks, bank superintendencies, finance ministries and other government agencies.

The objectives are to elaborate on the main characteristics of the Microfinance industry and focus on issues of sustainability and performance evaluation. To achieve these objectives basic understanding of accounting principles and procedures are necessary.

The objective of the course is therefore to ensure that the students will acquire the skills needed for analyzing and reviewing of financial statements of MFIs.

Outline

Financial analysis of MFI and measuring sustainability: subjects to cover.

  • Selected principles of accounting
  • Balance sheet, Income statement and cash flow statement and selected financial terms. The distinction between cash and non cash expenditures
  • Selected Financial ratios and the typical financial ratios of microfinance and micro- enterprises
  • The adjustments of financial statements to:
    1. inflation
    2. subsidies
  • The role of interest rate in resource allocation. Real and nominal interest rates
  • Typical lending rates of microfinance, spreads and the differences between rates and spreads of “regular” banks and MFIs
  • Sustainability – how is it defined and why it is important? Elaborating on operational self sufficiency (OSS) financial self sufficiency (FSS) and the subsidy dependence index (SDI)
  • Outreach –how is it defined?
  • Transaction cost of MFIs- The main factor that explains the relatively “high” lending rates needed to achieve sustainability by MFIs
  • Agricultural financing: issues and solutions
  • Evaluating performance of salient MFIs (BRI Indonesia, BAAC in Thailand)