Portfolio quality is the lighthouse indicator of the finance-macro economy nexus, even more important in unstructured immature environments of development finance sector such as microfinance. Growing over indebtedness indicated by deteriorating portfolio quality seems to signalup coming stress in m ost m icrofinance m arkets, b ecoming a ricocheting specter of a global repayment crisis lurking in the shades of the past repayment crisis. The question what factors are important for the portfolio quality thus acquires new significance as resources demarginalizing microfinance including regulatory attention are to be directed to most efficient directions. Is it rather the microeconomic forces at arm’s l ength w ithin v illage b anks s uch a s t he m usketeer principle or rather macroeconomic powers that can be traced to impact of the aggregate portfolio quality?
Portfolio quality is the lighthouse indicator of the finance– macro economy nexus, even more important in unstructured immature environments of development finance sector such as microfinance. Growing over indebtedness indicated by deteriorating portfolio quality seems to signalup c oming stress i n m o st m i crofinance m a rkets, b e coming a r icocheting s pecter of a global repayment crisis lurking in the shades of the past repayment crisis. The question what factors are important for the portfolio quality thus acquires new significance as resources demarginalizing microfinance including regulatory attention are to be directed to most efficient directions.