Thesis (MDF)--Stellenbosch University, 2011. / The research report provides a credit risk assessment and evaluation of Accion Microfinance Bank
Limited (AMFB) for the period 2006 to 2010, using Morgan Stanley’s methodology for analysing the
credits and performance ratings of microfinance institutions (MFIs). Since MFIs are set up to
provide credit and other financial services to the poor, financially underserviced segment of the
society, and since the credit support granted to such micro businesses usually lacks collateral, it is
imperative that the management of such credit services be sound in order to mitigate the high risks
involved. Thus, credit risk management determines the success and survival of microfinance banks
(MFBs): weak credit management leads to capital erosion and eventual failure, whereas sound
credit risk management guarantees profitability and sustainability and, hence, the realisation of the
objectives of their setup – enhancing the welfare of micro-entrepreneurs. The data for the research
report were sourced from AMFB’s financial statements for the years 2006 to 2010 and from
interviews that were conducted with principal officials of this MFB. The research found that good
regulatory corporate governance and management practices, sound quantitative credit risk
assessment and management, and quality and maturity of management lead to low credit risk
accompanied by high profitability and sustainability for MFBs. As AMFB matured, the quality of
portfolio, profitability, sustainability and operating efficiency were seen to increase. The quality of
shareholders, board and management was found to be crucial for the sound management of the
MFB. The research report, therefore, recommends regular and continuous credit risk identification,
assessment and management, as well as sound corporate governance, if MFBs are to survive and
grow and achieve their developmental objectives.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/21643 |
| Date | 12 1900 |
| Creators | Oguntoyinbo, Mojisola |
| Contributors | Ayayi, Ayi Gavriel, Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 55 p. |
| Rights | Stellenbosch University |
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