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Short Bio Jovi C.

Dacanay graduated BS Statistics, MS Industrial Economics and MA Economics and is currently pursuing her PhD Economics in the Ateneo de Manila University. She lectures in Mathematical Statistics, Social Economics and Research Seminar in the University of Asia and the Pacific. Her research includes industrial economics, industrial organization of health care markets, economics of film and microfinance. She is currently involved in empirical work on the microfinance industry of the Philippines and has presented papers in international conferences and published in conference proceedings. Jovi C. Dacanay Instructor and Senior Economist School of Economics University of Asia and the Pacific Business Address Pearl Drive corner St. Josemara Escriv Drive Ortigas Business Center, Pasig City (1605), Philippines (063) 637-0912 to 0926 Home Address 54 Examiner St., Barangay West Triangle Diliman (1104), Quezon City, Philippines Direct Line: (063) 372-4008 to 4010 or 414-9383 Cellphone Number: (063) 09274942714 E-mail Address jovi.dacanay@uap.asia jovicdacanay@gmail.com jovicdacanay@yahoo.com 1

Explaining Growth and Consolidation in the Microfinance Industry of the Philippines

Abstract

Microfinance industries have tried to mitigate the risks inherent among micro-enterprises as borrowers through a system or combination of group and individual lending. Microfinance is the supply of loans, savings and other financial services to the poor. The poor throughout the developing world frequently are not part of the formal employment sector. They do not have easy access to credit. This study attempts to tackle the following problem. Will an understanding of the life cycle of firms in the microfinance industry explain their performance? This problem shall be answered through the following objectives: First, describe the performance of microfinance firms in the Philippines, through a growth trajectory, also termed as life cycle, by using relevant financial indicators; Second, determine the factors affecting the performance of microfinance firms by age group, making use of indicators which indicate portfolio quality, efficiency, sustainability and outreach. The methodology of the study is based on an analysis of the life cycle and growth trajectory of small firms (Reid 2003). With the social performance preference of the industry, i.e. poverty alleviation via entrepreneurship, micro entrepreneurs usually have priority over loans. The growth stage of small firms are usually not phases of high profitability, debt is resorted to, yields on loans, in the case of the microfinance industry, has to increase through a better quality of loans. Thus, microfinance industries go through a next stage wherein borrowers are closely monitored. Once borrower quality of assured, the firm enters into a second growth phase wherein the firm resorts to equity financing in order to achieve its expansion phase. In this stage, the firm can pay dividends to investors and the firm resorts to decreasing its own borrowings. With the use of reported financial indicators in the MIX Portal from 46 regularly reporting MFIs all over the Philippines, a panel regression correcting for heteroskedasticity was done. The life cycle phases of the MFIs can be explained using the performance standard indicators for MFIs: portfolio quality, efficiency, sustainability and outreach. The results are consistent with the expected outcomes from the life cycle model of Reid (2003). The results show that even with a composition of micro borrowers forming part of the clientele, the performance of MFIs can be monitored and their behavior follows the behavior of market competitive small firms.

Keywords: life cycle, financial viability, social performance, microfinance

Table of Contents

1. Introduction

2. Literature Review

3. Theoretical Framework

11

4. Empirical Methodology

23

5. Results

28

6. Conclusion

34

References

36

Appendix 1. P.E.S.O. Standards

38

Appendix 2. Database

40

Appendix 3. Description of Firms

58

Explaining Growth and Consolidation in the Microfinance Industry of the Philippines


1. Introduction

Background An effective financial sector serves as a link or mediator in order to allow a steady flow of funds to finance business operations and investments. Firms considered as high risk do not have access to such funds. Among such firms are micro-enterprises who only have access to funds for loans made available by the microfinance industry, if the proprietors of the business resort to commercial financing schemes. Firms engaged in micro-enterprise lending, hereby termed as microfinance, do not have the same access as other private enterprises to the funds provided by the commercial financial sector. Even if some firms lending to micro-enterprises are registered as non-government organizations, they operate as commercially established microfinance firms.

Microfinance industries have tried to mitigate the risks inherent among micro-enterprises as borrowers through a system or combination of group and individual lending. Microfinance is the supply of loans, savings and other financial services to the poor. The poor throughout the developing world frequently are not part of the formal employment sector. They may operate small businesses, work on small farms or work for themselves or others in a variety of businesses. Many start their own micro businesses, or small businesses, out of necessity, because of the lack of jobs available. 1 The more stable microfinance enterprises have operated for less than 15 years. Analysts of the sector claim that the stability of a microfinance enterprise will be seen only when it is able to survive more than two decades. Due to the greater number of firms who have been operating for less than 15 years, the view that the microfinance industry is a high risk sector lingers and limits the amount of funds made available for loans and credit.

http://www.themix.org/about-mix/about-mix#ixzz1UUlL62Qg 4

Problem and Objectives of the Study This study attempts to tackle the following problem. Will an understanding of the life cycle of firms in the microfinance industry explain their performance? This problem shall be answered through the following objectives: First, describe the performance of microfinance firms in the Philippines, through a growth trajectory, also termed as life cycle, by using relevant financial indicators; Second, determine the factors affecting the profitability of microfinance firms by age group, making use of indicators which indicate portfolio quality, efficiency, sustainability and outreach. 2. Literature Review Several studies on the microfinance industry have used finance theory to explain the operations of a micro-lender. These studies, however, usually rely on empirical investigations and results as a main source to explain the basic relationship between firm performance to growth and financing. Reid (1996, 2003) provide the theoretical underpinnings to relate the operations of small business enterprises (SBEs) with the financial needs. His theoretical approach uses the basic neo-classical economic assumptions on the behavior of a profitmaximizing small firm. According to Reid (1996), Vickers (1970) was the first writer to integrate the production aspect of the firm with the financial. The firm needs financial capital to hire inputs and to produce and to sell outputs. It acquires outside financial capital either in the form of debt, for which it pays a rate of interest, or in the form of equity, which has a required rate of return, to be interpreted as the cost of equity. The value maximization problem which the firm solves involves both the production function constraint, and also the financial capital constraint. Thus the solution of this problem not only determines what will be sold and how much will be hired of various factors, but also how much financial capital will be used, and in what ways. Subsequent studies such as Leland (1972) first combined production and finance in a dynamic theory of the firm (Reid, 1996). In his case, the theory of the firm adopted was based on so-called managerial principles. Therefore the goal of his firm was to maximize the total discounted value of sales (over a finite planning horizon) plus the final value of the equity. However, though this model started an important new line of enquiry, in itself it contained 5

several flaws and inconsistencies. For instance, it required that the discount rate be equal to the borrowing rate, but yet that there was a decreasing efficiency of debt compared to a constant efficiency of retained earnings (Reid, 1996). More rigorous treatments of how a small firm combines production and financing in a dynamic theory of a firm had to be done. A synthesis of these approaches is provided by Hilten, Kort and Loon (1993).2 The type of firm being considered is a familiar one to small firms specialists. It has no access to the stock exchange, has limited access to debt finance, and its technology is subject to decreasing returns. It is assumed that production is a proportional function of capital, and sales are a concave function of output. In terms of its balance sheet, the value of capital assets is equal to the sum of debt and equity. 3 Equity can be raised by the retention of earnings, and there is assumed to be a maximum debt to equity (i.e. gearing) ratio determined by the risk class of the enterprise. It is assumed that there is a linear depreciation rate on capital. The mathematical development used to explain a dynamic theory of the firm led to the study of financial structure to the stages of development of a firm to risk. Modigliani and Miller (1958, 1963) highlighted the important issues involved in financial structure decisions namely: the cheaper cost of debt compared to equity; the increase in risk and in the cost of equity as debt increases; and the benefit of the tax deductibility of debt. They argued that the cost of capital remained constant as the benefits of using cheaper debt were exactly offset by the increase in the cost of equity due to the increase in risk. This left a net tax advantage with the conclusion that firms should use as much debt as possible. In practice firms do not follow this policy (Chittenden et al, 1996). Access to capital markets is not frictionless and influences capital structure. These findings lead one to look at the micro-enterprise in terms of its stage of development, hereby termed as life cycle. However, the life cycle of a firm would have to be related to its financial structure in order to finance production. Lastly, the friction which

happens within firms, i.e. the choice to use more or less debt to finance production and expansion leads to agency problems. Agency problems arise due to the relationship between ownership and management, as is observed in the contractual arrangements which firms would

2 3

See Reid (1996). Hence, also, the rate of change of capital assets equals the rate of change of equity plus the rate of change of debt. 6

undertake in order to access external financing. These key issues would provide the main areas of literature used in the study.

Life Cycle Approach to Analyzing Financial Structure Reid (1996, 2003) explains the maximization problem in a dynamic setting. The

maximand is the shareholders' value of the firm, under the assumption of a finite time horizon on the dividend-stream integral. The constraints of this maximization problem have been largely covered in the previous paragraph with the addition of initializing values of variables, and nonnegativity constraints on capital and dividends (i.e. a zero dividend policy is possible). This problem can be solved by the Pontryagin Maximum Principle. The state variables, representing the state of the firm at a point in time, are equity and capital. The control variables are debt, investment and dividend. The results give a trajectory for the life cycle of the firm given a debtequity or financing source choice on the part of the firms owner. Each small firm goes through a stage of growth, consolidation, further growth or expansion, and stationarity. Due to the small scale of the firm, positive marginal returns to capital will stay positive if the firm decides to expand or grow. The stages a firm goes through in the trajectory will depend on the level of debt versus equity which the firm owner chooses as a financing source or instrument. It can either borrow, therefore rely on debt financing, or, rely on its internally generated profits or equity financing. Reid (1996 and 2003) provides a theoretical explanation of the firms trajectory in its life cycle for each choice. Specifically, his model enables the firm to predict the relationship between performance to capital growth and financing source.

Pecking Order Framework The empirics provide strong support for a pecking order view of financial structure, explaining well the tendency of small business enterprises to rely heavily on internal funds as proposed by Myers (1984). The pecking order framework (POF) suggests that firms finance their needs in a hierarchical fashion, first using internally available funds, followed by debt, and finally external equity. This preference reflects the relative costs of the various sources of finance. This approach is particularly relevant to small firms since the cost to them of external equity, stock market flotation, may be even higher than for large firms for a number of reasons. As a consequence, small firms avoid the use of external equity. 7

According to Myers (1984), contrasting the static tradeoff theory of Modigliani and Miller (1958, 1963) based on a financing pecking order: First, firms prefer internal finance; second, they adapt their target dividend payout ratios to their investment opportunities, although dividends are sticky and target payout ratios are only gradually adjusted to shifts in the extent of valuable investment opportunities; third, sticky dividend policies, plus unpredictable

fluctuations in profitability and investment opportunities, mean that internally-generated cash flow may be more or less than investment outlays. If it is less, the firm first draws down its cash balance or marketable securities portfolio; fourth, if external finance is required, firms issue the safest security first. That is, they start with debt, then possibly hybrid securities such as convertible bonds, then perhaps equity as a last resort. In this story, there is no well-defined target debt-equity mix, because there are two kinds of equity, internal and external, one at the top of the pecking order and one at the bottom. Each firm's observed debt ratio reflects its cumulative requirements for external finance. Simply, the pecking order framework states that small firms prefer to use internally generated funds to finance debt, and in the event that if this is not enough do they resort to external sources. The combination of rapid growth and lack of access to the stock market are hypothesized to force small firms to make excessive use of short-term funds thereby increase their overall debt levels and reduce their liquidity. (Chittenden et al, 1996). But the lack of exposure to such financial activities makes MFIs less risky, given their current size (Krauss and Walter, 2008). Empirical studies (Karlan 2005, 2009, 2010) show that during expansion, MFIs resort to internally generated funds

Agency Theory The use of external finance by small firms is also amenable to a transaction cost/contracting/agency theory analysis. The fixed cost element of transactions inevitably puts small firms at a disadvantage in raising external finance. Agency theory provides valuable insights into small firm finance since it focuses on the key issue of the extent of the interrelationship between ownership and management. Agency problems in the form of information asymmetry, moral hazard and adverse selection are likely to arise in contractual arrangements between small firms and external providers of capital. These problems may be more severe, and the costs of dealing with them, by means of monitoring and bonding, greater, 8

for small firms. Monitoring could be more difficult and expensive for small firms because they may not be required to disclose much, if any, information and, therefore, will incur significant costs in providing such information to outsiders for the first time. Moral hazard and adverse selection problems may well be greater for small firms because of their closely held nature. Bonding methods such as incentive schemes could be more difficult to implement for such firms. The existence of these problems for small firms may explain the greater use of collateral in lending to small firms as a way of dealing with agency problems. (Chittenden et al, 1996; Reid, 1996). The lack of financial disclosure and their owner-managed nature is common among MFIs. This leads to the hypothesis that lenders will be unwilling to lend long-term to such firms particularly because of the danger of asset substitution. Consequently, the smallest firms will have to rely on short-term finance to the detriment of their liquidity. Alternatively, in order to induce lenders to provide long-term funds in the face of agency problems, the small firm could provide collateral. This would be a suitable approach for small firms with a high proportion of fixed assets and so asset structure is included as an independent variable. Multilateral agencies and commercial, investment banks are willing to expand their outreach to microcreditors, but a deeper study has to be done, i.e. randomized trials. In RP, such trials have been done for Green Bank and First Macro Bank (Karlan 2009, 2010)

Microfinance Industry in the Philippines A period of cheap capital made available to micro-firms in the Philippines lasted briefly due to the occurrence of the Asian Financial Crisis, as the commercial financial sector opted to regulate the financial system through market discipline, i.e. strict monitoring of debts, loans and risks. This period translated to a relatively rapid commercialization of the microfinance industry, enabling small entrepreneurs to operate their business and manage their limited financial assets under the purview of strict market discipline. (Charitonenko, 2003; Meagher et al, 2006). It also led to the closure of credit cooperatives with a high percentage of non-performing loans due to the large number of members/borrowers who invested heavily on non-productive fixed assets such as building construction, trucks, etc. Eventually some rural banks have extended loans to the microfinance industry, non-government organizations (NGOs) have established themselves to form part of the non-financial institutions offering credit to micro-enterprises, and, more 9

financially sustainable credit cooperatives have survived the financial crisis. Thus, firms from the commercial financial sector who are involved in micro-lending can be grouped into three: banks (thrift, rural and cooperative banks), non-government organizations and savings/credit cooperatives, credit unions. (See Table 1). A financial performance monitoring system for cooperatives and the microfinance industry was set-up under the supervision of the World Bank and implemented by the Microfinance Council of the Philippines, Inc. and the Cooperatives Development Authority (for data collection), and the Bangko Sentral ng Pilipinas. Regulation in the industry allows a flexible system which would allow the industry to grow and mature (Meagher et al, 2006). As a consequence financial performance indicators are used as a monitoring tool to gauge satisfactory financial performance, growth and outreach, efficiency and sustainability through the Philippine Microfinance Performance Standards (Performance, Efficiency, Sustainability and Outreach (P.E.S.O.)), which were defined by the National Credit Council. Currently, financial information is made available through the Microfinance Information Exchange (MIX) Market platform. The Microfinance Information Exchange (MIX), incorporated in 2002, is a non-profit organization headquartered in Washington, DC with regional offices in Azerbaijan, India, Morocco, and Peru.4 MIX collects and validates financial, operational, product, client, and social performance data from MFIs in all regions of the developing world, standardizing the data for comparability. This information is made available on MIX Market (www.mixmarket.org), a global, web-based, microfinance information platform, which features financial and social performance information for approximately 2000 MFIs as well as information about funders, networks, and service providers.5 This portal shall be the source of valuable information on the international

microfinance industry, including annual financial data for the Philippines, from which the 2009 data listed more than a hundred firms involved in micro-enterprise lending. Micro-enterprises operating in poor and/or developing countries lack access to bank credit, especially in rural areas, where a large majority of individuals do not have adequate collateral to secure a loan. These individuals, largely as a result of the inability of formal credit institutions to monitor and enforce loan repayments, are forced either to borrow from the informal-sector and moneylenders at usurious interest rates, or are simply denied access to credit
4 5

http://www.themix.org/about-mix/about-mix#ixzz1UUlw3jXI Ibid. 10

and therefore investment. A potential solution to the above problem is the implementation of peer-monitoring contracts by formal credit institutions such as savings/credit cooperatives. In contrast to the standard bilateral creditorborrower debt contracts, such agreements involve, on a collective basis, a group of borrowers without collateral who are linked by a joint-responsibility default clause, that is, if any member of the group defaults, other members have to repay her share of the debt, or else the entire group loses access to future refinancing. (De Aghion, 1999). Collective credit agreements with joint responsibility have the property of inducing peer monitoring among group members, thereby transferring part of the costly monitoring effort normally incurred by credit institutions onto the borrowers. In practice, the use of peer monitoring arrangements has been extensive, particularly in developing countries. However, results as measured by repayment rates, have been mixed, according to a large number of descriptive and empirical articles on the subject. (De Aghion, 1999).

Table 1. Main Types of Institutions Providing Microfinance Services in RP (2003)

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In the Philippines, the more financially viable microfinance firms are located in urban areas, whose borrowers are into the business of retail (sari-sari stores), transport (tricycle and jeepney) service, laundry, dress shops and personal services. Rural based micro-enterprises are still perceived to be high risk and fewer families are able to access loans. (See Table 2). Rural banks have to engage themselves into intense monitoring of rural and family-based micro-firms who possess assets such as land and a house made of concrete. In fact, more viable micro-firms or family enterprises, do not belong to the lowest income class, and have family incomes which are above the poverty threshold. Rather than focusing on the design of peer monitoring groups and the financial structure of micro-enterprises into group lending, this study shall dwell on the organization of each lender involved in microfinance. An appropriate framework shall now be established based on the

three main issues tackled in the industrial organization literature as regards the relationship between growth, choice of financing source and risk among small firms.

Table 2. Regional Distribution of Active Microfinance Loans, 2007

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3.

Theoretical Framework In a neoclassical theory of the small firm, generalized to incorporate money capital

(Vickers,1987), the conditions for maximizing profit will determine an optimal asset structure for the small firm, along with the familiar marginal conditions for production optimality. It requires that the full marginal cost of debt should equal the full marginal cost of equity, which in turn should equal the discount factor on the marginal income stream. Thus optimal amounts of debt and equity (and hence gearing) are determined, along with optimal hiring of factors of production. Previous evidence (Reid, 1991) has suggested that this optimality requirement has been reflected in a strong measured association between gearing and survival of the small firm. In particular, lower gearing significantly raised survival prospects for the small firm over a three year time horizon. It is likely that this arises because of both the lower risk exposure and the lower debt servicing associated with lower gearing. (Reid, 1999). Microfinance firms, on the other hand, would be composed of a large number of such types of borrowers. Their ability to manage funds will depend on the depth of exposure and intensity of monitoring in handling the debt obligations of micro-enterprise creditors. The neoclassical model of analyzing small firms can also be applied to small to medium-sized enterprises whose main source of business is lending. Optimal amounts of debt and equity are chosen based on their ability to gain profits and internally source capital. These decisions are made according to the stage each firm has in its life cycle. The general finding is that financial structure is not a major determinant of performance in this, the very earliest, phase of the life-cycle of the micro-firm. While it is possible to identify specific financial features which may favor survival (i.e. the availability of trade credit) or may threaten survival (i.e. the use of extended purchase commitments), conventional features of financial structure (i.e. assets, gearing) do not play a significant role. However, other (nonfinancial) explanations of early-stage survival are available, including the use of advertising and business planning, and the avoidance of precipitate product innovation. This suggests that market features and internal organization of the micro-firm may dominate financial structure as determinants of survival in the very earliest phase of the life-cycle. A subsidiary finding favors the view that high efficiency entrepreneurs tend to form larger firms which attract higher efficiency and higher paid labor. (Reid, 1999).

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Formally, the dynamic view of the firm can be modeled as follows (Reid, 2003). Reid (1996, 1999, 2003) uses a dynamic financial model of the small, owner-managed enterprise.

The emphasis is upon debt and equity relationships, and their modification, as the small firm goes through various stages of growth. The basis of this modeling is the extant literature on the dynamics of the firm. It is assumed that the owner-manager engages in maximizing the value of his or her firm according to:

where D > 0 is the dividend stream, and i is the owner-manager's rate of time preference. E denotes equity, is the planning time horizon, I is gross investment and B is debt. For this model, the state variables are the amount of equity (E) and the capital stock (K); with the control variables being debt (B), investment (I) and dividend (D). It is assumed that the owner-manager pursues the goal of maximization of value as in (1) by its dividend, investment and debt policy, subject to the following constraint upon policy, and therefore upon the state of the firm and its performance:

where (2) is the state equation for equity, with operating profit, r the interest rate on debt, and the depreciation rate on capital goods, is the maximum gearing ratio permitted for the risk class of debt to which an interest rate r is attached. Notice that what drives this maximum on gearing is a limit on desired risk exposure, not a limit on outside finance (which could be expressed as a credit rationing argument). In fact, limits on gearing depend on the debt-equity ratio not the level to which equity or debt are provided by investors or lenders. It is also notable

14

that small firms often have gearing ratios well in excess of unity, in the early stages of the life cycle, casting doubt on the credit-rationing argument of debt finance. Like dividends, debt and capital are subject to non-negativity constraints; and the initializing values of equity and capital are e0 and k0, respectively. Operating profit () is defined as the difference between sales (S) and production costs, given that capital is the only factor input. It is assumed that the output rate of the firm (Q) is proportionately related to the capital input by the capital productivity parameter K. Thus operating profit may be written:

assuming a unit price of capital goods. Finally, the firm's sales are defined by the function S(Q) which is monotonically increasing and concave in Q, with sales being positive for positive outputs. Thus:

In effect, this small firm is subject to decreasing returns to scale, the source of which may be an imperfect goods market and/or unspecified non- production costs which raise the marginal costs of organizing the production plan of the firm as it grows. The evidence for decreasing returns in small firms has been established by the author Reid (1993). Parameter restrictions for the model are that:

Further restrictions, which make the model more tractable, are that there are constant unit (and hence marginal) costs of finance, which are denoted cE, cD or cED depending on whether the financial structure of the firm is equity (E) or debt (D) dominated, or some mixture of the two (ED). It is assumed that marginal revenue close to zero output exceeds the greatest of these costs, implying the small firm has a motivation to at least start investing and producing. Finally, it is assumed that operating profit cannot be negative ( > 0) (Reid, 2003), that the prices of debt and equity differ (r i) and that equity at time zero is positive (E(0) > 0). These last restrictions follow from the assumptions: (a) that making non- negative profit is a survival criterion; (b) that debt and equity markets are distinct; (c) that holding equity in itself may engender utility (e.g. from owner-management and the control it implies) that makes equity-holders willing to accept 15

less than the return relevant to the investment risk class; and (d) that the owner-manager has at least a certain amount of equity at inception of the business, e 0 > 0. The Hamiltonian for the system is

The derivation of feasible paths for the above model is omitted, but the implications can be summarized as follows (Reid, 1996). If debt is cheap (i > r) maximum debt finance is used, and no dividend is paid until a stationary state is reached (See Figure 1). Then there is no further growth in output, debt or capital stock, and a positive dividend is paid. Whilst growth occurs, marginal revenue from sales exceeds the marginal cost of debt, that is S' > cD. This implies that the marginal return to equity exceeds the owner manager's time preference, so all earnings will be re-invested. When this inequality ceases, because of decreasing returns, the optimal output ( ) has been reached.

Figure 1. Trajectories if debt is cheap (i > r)

When equity is cheap (i < r) then, assuming that the owner-manager has at least some equity at start-up, the firm will increase its borrowing to start with (until t1) (See Figure 2), because the marginal revenue of sales exceeds the marginal cost of debt finance, or S' > cED.

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Figure 2. Trajectories if equity is cheap (i < r)

Each additional unit of capital which is bought with debt finance generates a greater increment in sales than the increment in cost of debt incurred. Once S' > cED debt will start to be paid back out of retained earnings (during the consolidation phase), until it is completely paid back (t2), at which stage further growth occurs (after t2) because S' > cE where cE is the marginal cost of capital goods which are financed entirely by equity. This will cease (in the stationary phase) once marginal returns from sales fall to i. The optimal output ( ) will then have been

reached, only replacement investment will occur, and the remaining dividend will go to shareholders (Tse-Wei Fu et al, 2002). In this study, it is important to gauge at what stage of

the life cycle is the firm undergoing. Once the stage where the firm is in the life cycle is achieved, one can predict how it will behave as regards the choice on either resorting to debt or equity to finance investments. Under the pecking order framework (POF), the use of external funds is very much related to profitability and so this is included as an independent variable with the hypothesis being that, since small firms in particular will make use of internally generated funds as a first resort, those which make use of external funds will be those with a lower level of profit. The corollary of this for liquidity is that firms with higher profits will have more internal funds available and will, therefore, need to borrow less in the way of short-term funds thereby improving liquidity. It can also be hypothesized from the POF, given the importance of retained funds, that older firms will 17

make less use of external finance and have higher liquidity. Reids (2003) growth trajectory model follows the pecking order framework on decisions made by firms when deciding on the optimal combination of debt and equity. Thereby, the behavior of firms using the life cycle model of Reid (2003) is also consistent with the pecking order framework. For microfinance institutions, in general, external financing is resorted but only through commercial banks, commercial investors and multilateral institutions granting loans to microfinance. The stock market is not resorted as the firms are not open to public ownership, thereby reducing its sensitivity to market signals and dependency on capital markets. Internationally, MFIs display virtually no correlation with global capital markets (Krauss and Walter (2008)). Agency theory suggests that information asymmetry and moral hazard will be greatest for the smallest firms because of the lack of financial disclosure and their owner-managed nature. Agency theory can be applied to MFIs from the point of view of lack of observable information when monitoring outreach, i.e. reasons for default on loans, efficiency of group lending versus individual lending, etc. Output can only be observed when the MFIs reports financial accounts on a regular basis. Otherwise, there is no possibility for operations to be monitored. With this in mind, the study focuses its analysis only on firms who have regularly made their financial data available through the Microfinance Information Exchange (MIX) Portal. Some of these firms may have been established in the 80s and 90s but data can only be made available as of 1996 and 1997, and only for four firms. The rest have data from 2002 onwards.

Applicability of the Framework to MFIs in the Philippines It can be observed that the life cycle trajectory proposed by Reid is applicable to microfinance institutions when their total assets (indicator for output), total capital and total equity (indicators for capital) are plotted with respect to time (See Figure 3). Below is a time series for Alalay sa Kaunlaran, Inc. (ASKI), an MFI and NGO located in Cabanatuan, Nueva Ecija, whose data is available only from 2002 to 2010. The NGO was established in 1987, and 91-100% of its clients are micro firms. Even if ASKI started commercial operations in 1987, their financial information made available to the public only from 2002. The MFI seems to be serving micro firms for only a few years due to its growth trajectory.

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The expected behavior for cost of borrowings, r, is positive. However, return from equity, the indicator for the cost of investments, i, in the model of Reid (2003), is decreasing when the MFI is embarking on an expansion. This means that for an MFI, expansion is financed via debt, at the initial growth phase. More active borrowers are sought, there is an increase in assets, the loan portfolio is expanded, but equity does not grow as much. In this phase, dividends cannot be paid yet, the firm re-invests earnings, that is, yield from loans of creditors, or yield on loans is decreasing. This phase ends until the growth in the number of active borrowers slows down. From Figure 4, we can observe the above-mentioned relationship among the variables, as explained by Reid (2003). Such a trend happens for firms which are still in the first growth phase until the period of stagnant growth or consolidation. The early growth phase is an attempt to increase the number of active borrowers among micro firms, the consolidation phase is an attempt to improve the quality of loans, thereby, increasing efforts to monitor clients.

Figure 3.
Gross Loan Portfolio, Total Assets and Total Equity
Alalay sa Kaunlaran, Inc. (ASKI)
20000000
Variable A SKIGLP A SKITotA s A SKITotEq

15000000

in US Dollars

10000000

5000000

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

Source: MIX Portal (www.mixmarket.org)

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Figure 4.
Matrix Plot of Gross Loan Portfolio, Total Assets, Total Borrowers, Total Equity versus Number of Active Borrowers, Cost of Borrowing, Return on Equity,Yield on Loans MFI: ASKI
40
Gross Loan Portfolio

60

80

40.00%

50.00%

60.00% 10000000 5000000

20000000
Total Assets

10000000 0

Total Borrowings

12000000 8000000 4000000

3000000
Total Equity

2000000 1000000 20000 35000 50000 Number of Active Borrowers 0.00% Cost per Borrower 15.00% 30.00% Return on Equity Yield on Gross Loan Portfolio

Source: MIX Portal (www.mixmarket.org)

A similar trend can be observed for Banco Santiago de Libon, a rural bank, located in Libon, Albay, whose clients of micro firms only comprises 11-20% of total clients (See Figures 5 and 6). It was established in 1973. Data made available to the public for the banks operations only started in 2003. For a relatively young MFI, both Banco Santiago de Libon and ASKI, the growth trajectory as modeled by Reid (2003) consistently explains how growth and expansion is financed via debt. Yield on loans are re-invested, and no dividends are paid. For firms which have served micro firms for longer years, such as CARD NGO and CARD Bank, an NGO and rural bank, respectively, located in San Pablo, Laguna and has served micro firms since 1986, its year of establishment, and micro firms comprising 91-100% of total clients, a second growth phase can be observed. For both MFIs, a period of consolidation happens right before the period of expansion. During the consolidation phase, after having improved the quality of loans, and monitoring active borrowers, the firm is increasing its yield on loans and its returns to equity. The second growth phase is now financed via equity, no longer debt. The MFI pays dividends and attracts more borrowers and depositors, thereby 20

increasing its outreach. Reid (1991) model also seems to explain the growth trajectory of bigger and older firms such as CARD NGO. (See Figures 7-10) In summary, the life cycle of MFIs seem to be related to the loan cycle: period of

growth to consolidation to the second growth phase seem to last for 10 years. The variable which consistently shows this is total equity, as compared to total assets, total borrowing and gross loan portfolio. Figure 5.
Gross Loan Portfolio, Total Assets and Total Equity
Banco Santiago de Libon
Variable BSLGLP BSLTotA s BSLTotEq

4000000

in US Dollars

3000000

2000000

1000000

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

Source: MIX Portal (www.mixmarket.org)

21

Figure 6.
Matrix Plot of Gross Loan Portfolio, Total Assets, Total Borrowers, Total Equity versus Number of Active Borrowers, Cost of Borrowing, Return on Equity,Yield on Loans MFI: Banco Santiago de Libon
40 45 50 40.00% 45.00% 50.00%

Gross Loan Portfolio

3000000 2000000 1000000 4000000 3000000 2000000 500000 300000 100000 900000 600000 300000
5000 7500 10000 16.00% 24.00% 32.00%

Total Equity

Total Borrowings

Total Assets

Number of Active Borrowers

Cost per Borrower

Return on Equity

Yield on Gross Loan Portfolio

Source: MIX Portal (www.mixmarket.org)

Figure 7.
Gross Loan Portfolio, Total Assets and Total Equity
CARDNGO
70000000 60000000 50000000
Variable CNGOGLP CNGOTotA s CNGOTotEq

in US Dollars

40000000 30000000 20000000 10000000 0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

Source: MIX Portal (www.mixmarket.org) 22

Figure 8.
Matrix Plot of Gross Loan Portfolio, Total Assets, Total Borrowers, Total Equity versus Number of Active Borrowers, Cost of Borrowing, Return on Equity,Yield on Loans MFI: Center for Agricultural and Rural Development (CARDNGO)
30 35 40 40.00% 45.00% 50.00%

Gross Loan Portfolio

50000000 25000000 0 50000000 25000000 0

Total Borrowings

Total Assets

20000000 10000000 16000000 0

Total Equity

8000000 0
0 250000 500000 0.00% 10.00% 20.00%

Number of Active Borrowers

Cost per Borrower

Return on Equity

Yield on Gross Loan Portfolio

Source: MIX Portal (www.mixmarket.org)

Figure 9.
Gross Loan Portfolio, Total Assets and Total Equity
CARD Bank
70000000 60000000 50000000
Variable CBKGLP CBKTotA s CBKTotEq

in US Dollars

40000000 30000000 20000000 10000000 0

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

Source: MIX Portal (www.mixmarket.org) 23

Figure 10.
Matrix Plot of Gross Loan Portfolio, Total Assets, Total Borrowers, Total Equity versus Number of Active Borrowers, Cost of Borrowing, Return on Equity,Yield on Loans MFI: CARD Bank
48
Gross Loan Portfolio

56

64

40.00%

45.00%

50.00% 40000000 20000000 0

Total Assets

50000000 25000000 0

Total Borrowings

16000000 8000000 0

8000000
Total Equity

4000000 0 0 100000 200000 Number of Active Borrowers 0.00% Cost per Borrower 20.00% 40.00% Return on Equity Yield on Gross Loan Portfolio

Source: MIX Portal (www.mixmarket.org)

A look at the descriptive statistics of the old and young MFIs shows that the assumptions imposed by Reid (2003) on the market structure of the firms, to ensure that the firms are small and are perfectly, competitive seem to be verified in the descriptive statistics below. These assumptions are: (a) that making non- negative profit is a survival criterion; (b) that debt and equity markets are distinct; (c) that holding equity in itself may engender utility (e.g. from owner-management and the control it implies) that makes equity-holders willing to accept less than the return relevant to the investment risk class; and (d) that the owner-manager has at least a certain amount of equity at inception of the business, e0 > 0. The data shows that some young MFIs have operated at a loss due to the presence of a negative ratio for return to assets, return to equity, capital-asset ratio and debt-to-equity ratios. However, the older firms did not report a negative return from 2003 to 2010. Thus, firms operate so as to achieve accounting profits. The ratio of debt to equity is not one, thus, the firms operate where the debt and equity markets are distinct. Both young and old firms are holding a return to

24

equity ratio of 13% to 15%, manifesting a desire to achieve yields from loans that will enable them to pay dividends.

Table 3. Descriptive Statistics of the MFIs in the Study


Old MFIs Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis Jarque-Bera Probability Sum Sum Sq. Dev. Observations Borrowers per Staff 134.95 134.00 185.00 68.00 26.19 (0.65) 3.36 2.92 0.23 5,128.00 25,385.89 38 Borrowers per Staff 122.15 115.00 357.00 20.00 52.69 0.86 4.23 51.24 0.00 33,590 760,702 275 Depositors per Staff 152.27 154.00 302.00 6.00 45.07 0.37 7.55 32.75 0.00 5,634.00 73,127.30 37 Depositors per Staff 167.54 153.00 550.00 0.00 96.84 0.59 3.68 20.12 0.00 44,062 2,456,931 263 Portfolio at Risk (30 days) 0.04 0.03 0.12 0.00 0.03 1.01 3.17 6.36 0.04 1.57 0.04 37 Portfolio at Risk (30 days) 0.09 0.07 0.53 0.00 0.09 2.31 9.85 Return on Return on CapitalEuity Assets Asset Ratio 0.15 0.12 0.68 0.00 0.12 2.13 9.70 99.76 0.00 5.62 0.57 38 0.03 0.02 0.10 0.00 0.03 0.81 2.45 4.61 0.10 1.23 0.02 38 0.23 0.21 0.47 0.08 0.11 0.60 2.22 3.26 0.20 8.93 0.46 38 Debt-toEquity Ratio 4.32 3.75 12.02 1.11 2.58 0.86 3.39 4.93 0.09 164.34 246.04 38 Debt-toEquity Ratio 4.20 4.35 40.45 -27.43 4.59 -0.59 28.35

Young MFIs Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis Jarque-Bera Probability Sum Sum Sq. Dev. Observations

Return on Return on CapitalEuity Assets Asset Ratio 0.13 0.14 2.66 -5.53 0.52 -6.11 72.01 0.03 0.02 0.23 -0.26 0.05 -0.12 8.47 308.03 0.00 7 1 247 0.24 0.18 0.92 -0.21 0.16 1.27 5.31

710.45 50,554.88 0.00 0.00 21 33 2 66 250 247

139.97 7,595.77 0.00 0.00 67 1,188 7 5,939 284 283

Source: MIX Market Information Portal for the Philippines (http://www.mixmarket.org/mfi/country/Philippines )

25

4.

Empirical Methodology The need to explain output, capital, debt, equity and profits with the use of specific

financial indicators across a time series through 46 firms would mean the need to perform a panel regression, using a fixed effects model with White cross-section covariance method in order to correct for heteroskedasticity. The difference in the life cycle of old (MFIs whose data includes a phase with initial growth, consolidation and second growth phase, or about data from 1996 to 2010, a total of 5 firms) and young firms (MFIs whose data includes only a growth to consolidation phase, or data from 2002 to 2010, a total of 41 firms). These 46 firms have to most complete data set in the MIX Portal. Due to the incompleteness of the time series, the regression will only include a regression from 2003 to 2010. Separate regressions shall be done for old and young firms, as the expected signs of the explanatory variables may differ. The variables suggested by Reid (2003) were operationalized using the performance standards of the National Credit Council. These standards aim to benchmark microfinance institutions with one another so that performance standards would be gathered. The standards of performance are: portfolio quality, efficiency, self-sufficiency and outreach (P.E.S.O). These standards are matched with the corresponding accounting variables which can be found in the MIX Portal. The variables used are seen in Tables 4 and 5.

Table 4. Operationalization of the Variables Theoretical Model Main Equations Dependent Variable = Equity Growth = Capital Growth K = Capital Stock Explanatory Variables For Equity: = Profits rB = Borrowing Cost D = Dividends I = Investment K = Cost of Capital For Capital: E = Equity B = Borrowings (Debt) Indicators Pertinent to MFIs Dependent Variable -Equity Growth MFI Performance Standards Operational SelfSufficiency Financial SelfSufficiency in Managing Debt Operational SelfSufficiency

-Gross Loan Portfolio Growth -Gross Loan Portfolio

26

Table 4. Operationalization of the Variables (Continued) Theoretical Model Theoretical Model Main Equations Main Equations Main Equations Main Equations Main Equations

For Profit: -Return on Sales Financial SelfPQ = Revenues = Profits Yield on Gross Loan Sufficiency in P = Production Portfolio Managing Assets Inputs For Output: Not S(Q) = Sales Total Sales Outreach Applicable P(Q) = Value of Output Sources: Reid (2003), Karlan (2005, 2009, 2010), Meagher et al (2006), Krauss and Walter (2008, 2009)

Table 5. MFI Performance Standards and Indicators Used for the Regression MFI Explanation of the Performance Standards and P.E.S.O. and MIX Performance Chosen P.E.S.O. Indicators Indicator Standards Standard: Portfolio quality measures the amount of risk in the current outstanding portfolio. It provides information on the percentage of non-performing P.E.S.O: Portfolio at assets, which in turn decrease the revenue and risk (30 days) should Portfolio liquidity position of the MFI not be greater than Quality Indicator: Portfolio at risk (PAR) ratio-refers to the 5% balance of loans with at least one day missed MIX: PAR (30 Days) payments, as a percentage of the amount of the portfolio outstanding including amounts past due as well as refinanced and restructured loans. Standard: Efficiency indicators measure the cost of P.E.S.O: Loan officer providing microfinance services to generate productivity = revenue. The indicators under this category show number of active whether the MFI is able to deliver micro finance borrowers per number services at least cost to the institution. They of account officers. Operational indicate the ability of the institution to generate For group lending: > Self-Sufficiency sufficient income to cover expenses related to the 300 borrowers. For (Efficiency) microfinance operation. individual lending: > Indicator: Operational Self-Sufficiency (OSS) is an 150 borrowers. efficiency variable which indicates whether or not MIX: Depositors per enough revenues have been earned to cover the Staff, Borrowers per organizations costs. Staff 27

Table 5. MFI Performance Standards and Indicators Used for the Regression (Continued) MFI Explanation of the Performance Standards and P.E.S.O. and MIX Performance Chosen P.E.S.O. Indicators Indicator Standards P.E.S.O: FSS = Operating Revenue / (Financial Expense + Loan Loss Provision Expense + Adjusted Standard: Sustainability measures the ability of the Expenses). Should be institution to generate sufficient revenues to cover greater than 100%; the costs of its operations in the long run without MIX: Financial Selfany subsidy. FSS for Managing Sufficiency Indicators: Financial self-sufficiency (FSS) ability Assets- Financial (Sustainability) of the organization to earn enough revenue to Revenues/Assets; sufficiently cover in the long-run all operating costs Capital-Asset and at the same time maintain the value of its Ratio capital and assets, without the need for subsidy. FSS for Managing Debt-Cost per Borrower; Return on Equity; DebtEquity Ratio Standard: Outreach indicators show the extent and P.E.S.O: Growth in depth of reach of the MFI. The extent of outreach the number of active is reflected by the growth in the number of active clients; growth in the clients (referring to those with outstanding microfinance loan microfinance loans with the institutions) and portfolio; depth of growth of the microfinance portfolio. The depth of outreach = total loans outreach is indicated by the ratio of the average outstanding / total Outreach loan size to the GNP per capita to measure the scale number of borrowers of MFI activities MIX: Number of active borrowers, number of deposits, Average Deposit Balance per capita Gross National Income Sources: Reid (2003), Karlan (2005, 2009, 2010), Meagher et al (2006), Krauss and Walter (2008, 2009) Applying the pecking order framework, whose results are equivalent to Reid (1991) model, the expected behavior of the explanatory variables are indicated as follows.

28

Objective 1 involves a description of the growth trajectory, also termed as life cycle, of microfinance firms in the Philippines. The dependent variables are total assets (output), gross loan portfolio and total equity (capital), and total borrowings (debt). These are the growth trajectories shown in Figures 1 and 2. The explanatory variables are: number of active

borrowers and deposits (for outreach), financial revenues over assets and the capital-asset ratio (for financial self-sufficiency in managing assets), return on equity and debt-to-equity ratio (for financial self-sufficiency in managing debt), cost per borrower (indicator for interest level for debt) and number of borrowers or depositors per staff (for operational self-sufficiency).

Table 6. Explanation of Variables used for Objective 1


Objective 1. Explanatory Variables (Outcomes of Micro Firms forming part of MFI) with Expected Sign on Regression Financial Variable Indicator Used (Dependent Variable)
Number of Active Borrowers (Outreach)) Deposits (Indicator for Savings Balance and Outreach) Financial Capital-Asset Revenues over Cost per Borrower Ratio Assets (Indicator for interest (Financial Self(Financial Selflevel on debt) Sufficiency) Sufficiency)

For Firms Experiencing Growth and Consolidation (i.e. Operating since 2003 only) Positive. MFIs Positive. Debt, at this Positive. Since debt Negative. The Negative. MFIs would like to phase is resorted to by the finance is used, MFIs are still in are still in the Gross Loan expand micro-firms. MFIs have to MFIs resorts to the process of process of Capital Portfolio (Loan Size) operations to monitor borrowers, deposits to finance increasing their increasing their improve increasing cost. MFI may Total Equity operations asset base. capital base. outreach incur loans Total Borrowings Debt For Firms Experiencing Consolidation to Second Growth Phase (i.e. Operating since 1996)

Output

Total Assets

Output

Total Assets

Positive. MFIs Positive. MFIs start Gross Loan would like to Negative. MFIs Negative. MFIs Positive. MFI may resort to resort to equity Capital Portfolio (Loan Size) expand continue to contiue to to external sources of financing, thus, more operations to increase their increase their loans to increase its loan Total Equity depositors are improve asset base. capital base. portfolio. needed outreach Debt Total Borrowings

29

Table 6. Explanation of Variables used for Objective 1


Objective 1. Explanatory Variables (Continued) Financial Variable Used (Dependent Variable)
Return on Equity (Indicator for interest level on equity, financial self-sufficiency) Debt-Equity Ratio (Indicator for debt and equity levels, financial self sufficiency) Borrowers or depositors per staff (Operational self-sufficiency)

Indicator

For Firms Experiencing Growth and Consolidation (i.e. Operating since 2003 only)

Output

Total Assets Gross Loan Portfolio (Loan Size) Total Equity Negative. Equity is not increasing and dividends are not yet paid as the MFI re-invests yield Positive or not significant. At the consolidation phase, the MFI does not increase equity nor loan portfolio. Positive. Increasing number of borrowers upon the early growth phase

Capital

Debt Output

Total Borrowings

For Firms Experiencing Consolidation to Second Growth Phase (i.e. Operating since 1996) Total Assets Gross Loan Portfolio (Loan Size) Total Equity Positive. Equity is increasing and dividends are being paid. Negative. At the second growth phase, the MFI decreases debt but equity has increased due to previous reinvestment of yield from loans. Positive but not significant. May resort to increase membership

Capital

Debt

Total Borrowings

Objective 2 involves determining the factors affecting the performance of microfinance firms using standard performance indicators. The MFIs shall be grouped by age and common trends of growth trajectories shall be done and explained in terms of outreach, financial and operational self-sufficiency. These are the variables which are observable through the available accounting data provided by the firms in the MIX portal. Panel regression shall be performed again as in the method for Objective 2. The variables and their expected outcomes follow. The dependent variables to be used are return on assets and yield on gross loan portfolio. The explanatory variables are: number of active borrowers and average deposit balance per capita gross national income (for outreach), financial revenues over assets and capital-asset ratio (for financial self-sufficiency in managing assets), return on equity and debt-to-equity ratio (for financial self-sufficiency in managing debt), cost per borrower (indicator for cost of debt),

30

portfolio at risk for 30 days (for portfolio quality) and number of depositors per staff (for operational self-sufficiency).

Table 7. Explanation of Variables used for Objective 2


Objective 2. Explanatory Variables (Outcomes of Micro Firms forming part of MFI) with Expected Sign on Regression Financial Variable Indicator Used (Dependent Variable)
Number of Active Borrowers (Outreach) Average Deposit Financial Capital-Asset Balance per capita Revenues over Cost per Borrower Ratio Gross National Assets (Indicator for interest (Financial SelfIncome (Financial Selflevel on debt) Sufficiency) (Outreach) Sufficiency)

For Firms Experiencing Growth and Consolidation (i.e. Operating since 2003 only) Return on Assets (Profitability of MFI) Yield on Gross Loan Portfolio (Profitability and Capacity to Reinvest) Negative. Unmonitored Positive. An Positive. An Positive. An increase in the increase in deposits increase in Negative. Unmonitored increase in number of increases the asst liquidity means increase in the number of solvency lessens active base, and thus, greater active borrowers would the risk of the borrowers increases possibilities for reincrease cost MFI would increase profitability. investment cost

Performance Performance

For Firms Experiencing Consolidation to Second Growth Phase (i.e. Operating since 1996) Return on Assets Negative. (Profitability of Unmonitored Positive. An Positive. An Positive. An MFI) increase in the increase in deposits increase in Negative. Unmonitored increase in number of increases the asst liquidity means increase in the number of Yield on Gross solvency lessens active base, and thus, greater active borrowers would Loan Portfolio the risk of the borrowers increases possibilities for reincrease cost (Profitability and MFI Capacity to Re- would increase profitability. investment invest) cost

31

Table 7. Explanation of Variables used for Objective 2


Objective 2. Explanatory Variables (Continued) Financial Variable Used (Dependent Variable)
Return on Equity (Indicator for interest level on equity) Debt-Equity Ratio (Indicator for debt and equity levels) Depositors Portfolio at Risk per staff 30 Days (Operational (Portfolio SelfQuality) Sufficiency)

Indicator

For Firms Experiencing Growth and Consolidation (i.e. Operating since 2003 only) Return on Assets (Profitability of MFI) Negative. Negative or not Negative. The Profitability is not significant. Debt is number of unpaid priority as efforts are expected to level off, loans lessens the Yield on Gross Loan put into monitoring thus, the ratio is MFIs capacity to Portfolio the quality of expected to be stable or generate re(Profitability and depositors and be decreasing investments Capacity to Reborrowers invest) Positive. Greater productivity per staff improves profitability.

Performance

For Firms Experiencing Consolidation to Second Growth Phase (i.e. Operating since 1996) Return on Assets (Profitability of MFI) Negative. The number of unpaid loans lessens the MFIs capacity to generate reinvestments Positive. Greater productivity per staff improves profitability.

Performance

Positive. The MFI is Negative. Debt is expected to pay expected to decrease, Yield on Gross Loan dividends as it starts thus, the ratio is Portfolio to earn from reexpected to be (Profitability and investments. decreasing Capacity to Reinvest)

5.

Results The regression results shall be presented for the four variables comprising the growth

trajectories, for objective one. In summary, the trend lines for old and young firms follow the expected results from the life cycle model. a. Regression Results for Gross Loan Portfolio

The expected positive coefficient for outreach (number of active borrowers, deposits) was obtained. Old and young MFIs would increase their loan portfolios in order to increase the participation of micro firms. The expected negative coefficient for financial self-sufficiency in

managing assets (financial revenues over assets and the capital-asset ratio) was also achieved. The increase in borrowings depletes financial revenues fast. The debt-to-equity and return on equity ratios are not significant to explain gross loan portfolio. The financial self-sufficiency for managing debt indicators does not capture the gross loan portfolio trend. Cost per borrower is

32

not significant, as well as the borrowers per staff, or the operational self-sufficiency indicator. (See Table 8)

Table 8. Panel Regression Results for Gross Loan Portfolio


Dependent Variable: GROSS LOAN PORTFOLIO (Old MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:17 Sample: 2003 2010 Cross-sections included: 5 Total panel (unbalanced) observations: 37 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 10462795 4823645 2.17 0.04 Number of Active Borrowers 58.80079 9.901651 5.94 0.00 DEPOSITS 0.772191 0.096904 7.97 0.00 Financial Rev / Assets -32066320 6809362 -4.71 0.00 Capital-Asset Ratio -22133533 12074576 -1.83 0.08 Cost per Borrower 233137.8 39177.55 5.95 0.00 Return on Equity 2302933 1658826 1.39 0.18 Debt-Equity Ratio -145000.5 617926.7 -0.23 0.82 Borrowers per Staff -19346.26 25421.48 -0.76 0.45 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.985337 Adjusted R-squared 0.978006 S.E. of regression 1702225 Log likelihood -575.3483 Durbin-Watson stat 2.160534 Mean dependent var 15796425 S.D. dependent var 11477869 F-statistic 134.3986 Prob(F-statistic) 0 Dependent Variable: GROSSLOANPORTFOLIO (Young MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:23 Sample: 2003 2010 Cross-sections included: 41 Total panel (unbalanced) observations: 202 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 3077337 2210601 1.39 0.17 Number of Active Borrowers 41.89715 3.293482 12.72 0.00 DEPOSITS 1.030894 0.03972 25.95 0.00 Financial Rev / Assets -6345716 3672887 -1.73 0.09 Capital-Asset Ratio -2691207 1184279 -2.27 0.02 Cost per Borrower 94.71957 8580.288 0.01 0.99 Return on Equity -36297.52 71634.23 -0.51 0.61 Debt-Equity Ratio 5696.559 12043.88 0.47 0.64 Borrowers per Staff -6514.936 6192.099 -1.05 0.29 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.981256 Adjusted R-squared 0.975376 S.E. of regression 1345953 Log likelihood -3109.313 Durbin-Watson stat 1.612518 Mean dependent var 6485129 S.D. dependent var 8577322 F-statistic 166.871 Prob(F-statistic) 0

b.

Regression Results for Total Assets

The expected positive coefficient for outreach (number of active borrowers, deposits) was obtained. Old and young MFIs would increase their asset size in order to attract investors and depositors. The expected negative coefficient for financial self-sufficiency in managing assets (financial revenues over assets and the capital-asset ratio) was also achieved. The increase in deposits is offset by the increase in borrowings by micro firms, or a smaller net deposit level thereby decreasing financial revenues. The debt-to-equity and return on equity ratios are not significant for young firms, as expected. However, return to equity is not significant but is positive for older MFIs. The debt-to-equity ratio is negative and significant for older MFIs 33

manifesting that older MFIs are starting to decrease debt and yielding higher equity. The Total Asset regression captures the effect of equity financing for older MFIs. This behavior is more likely to be expected for the total asset trend than for gross loan portfolio. Both young and old MFIs manifest financial prudence in managing debt. (Financial self-sufficiency in managing debt). Borrowers per staff, or the operational self-sufficiency indicator, is not significant for young MFIs. However, the cost per borrower is significant for both young and old MFIs. Thus, in order to achieve efficiency in the management of assets, MFIs have to monitor borrowers, thereby incurring higher costs. (See Table 9)

Table 9. Panel Regression Results for Total Assets


Dependent Variable: TOTAL ASSETS (Old MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:18 Sample: 2003 2010 Cross-sections included: 5 Total panel (unbalanced) observations: 36 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 10367534 5857489 1.77 0.09 Number of Active Borrowers 59.38867 6.290354 9.44 0.00 DEPOSITS 1.369716 0.109829 12.47 0.00 Financial Rev / Assets -40686811 9012921 -4.51 0.00 Capital-Asset Ratio -30724493 8517680 -3.61 0.00 Cost per Borrower 409753.7 51741.67 7.92 0.00 Return on Equity 3647988 5701475 0.64 0.53 Debt-Equity Ratio -985360.4 412152.3 -2.39 0.03 Borrowers per Staff 7516.276 17910.66 0.42 0.68 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.988982 Adjusted R-squared 0.983233 S.E. of regression 2110534 Log likelihood -567.2656 Durbin-Watson stat 1.364 Mean dependent var 23537180 S.D. dependent var 16299118 F-statistic 172.0357 Prob(F-statistic) 0 Dependent Variable: TOTAL ASSETS (Young MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:23 Sample: 2003 2010 Cross-sections included: 41 Total panel (unbalanced) observations: 198 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 2411775 1972304 1.22 0.22 Number of Active Borrowers 13.61854 2.647934 5.14 0.00 DEPOSITS 1.638989 0.036688 44.67 0.00 Financial Rev / Assets -7618897 4059215 -1.88 0.06 Capital-Asset Ratio -2000218 1243613 -1.61 0.11 Cost per Borrower 10531.03 6602.178 1.60 0.11 Return on Equity -126154.9 71329.93 -1.77 0.08 Debt-Equity Ratio 14259.05 13558.03 1.05 0.29 Borrowers per Staff 1057.103 1784.264 0.59 0.55 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.989971 Adjusted R-squared 0.98674 S.E. of regression 1494649 Log likelihood -3067.848 Durbin-Watson stat 1.400111 Mean dependent var 10020025 S.D. dependent var 12980015 F-statistic 306.4219 Prob(F-statistic) 0

34

c.

Regression Results for Total Borrowings

The expected positive coefficient for outreach (number of deposits) was obtained but is negative for number of active borrowers for young MFIs. Due to the need to finance debt through internally generated funds, the increase in the number of active borrowers depletes the available loan portfolio for creditors. On the other hand, older MFIs can increase their outreach and can handle externally sourced debt as they have already increased their capital and asset base. The expected negative coefficient for financial self-sufficiency in managing assets

(financial revenues over assets and the capital-asset ratio) was also achieved for old and young MFIs. This result shows the prudent behavior of MFIs as regards borrowings and maintaining sufficient assets for operations. The debt-to-equity and return on equity ratios are not significant for young firms, as expected. However, return to equity and the debt to equity ratio are positive and significant for older MFIs. This result is expected due to the behavior of MFIs to decrease its debt structure during a period of expansion. Older firms have to achieve greater financial self-sufficiency in managing debt. Borrowers per staff and the cost per borrower, or the operational self-sufficiency indicators, are not significant for young MFIs. However, these two indicators are both positive and significant for old MFIs. Thus, in order to achieve efficiency in the management of borrowings, MFIs have to monitor creditors, thereby incurring higher costs. (See Table 10)

35

Table 10. Panel Regression Results for Total Borrowings


Dependent Variable: TOTAL BORROWINGS (Old MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:20 Sample: 2003 2010 Cross-sections included: 5 Total panel (unbalanced) observations: 37 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 35108774 5957294 5.89 0.00 Number of Active Borrowers 38.65543 11.77703 3.28 0.00 DEPOSITS 0.213434 0.115887 1.84 0.08 Financial Rev / Assets -37238534 10933245 -3.41 0.00 Capital-Asset Ratio -48225255 8104807 -5.95 0.00 Cost per Borrower 146194.9 40857.37 3.58 0.00 Return on Equity 6808558 3015603 2.26 0.03 Debt-Equity Ratio -997539.1 323513.7 -3.08 0.01 Borrowers per Staff -99507.95 26892.44 -3.70 0.00 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.962878 Adjusted R-squared 0.944317 S.E. of regression 1763276 Log likelihood -576.652 Durbin-Watson stat 1.843637 Mean dependent var 7532825 S.D. dependent var 7472403 F-statistic 51.87675 Prob(F-statistic) 0 Dependent Variable: TOTAL BORROWINGS (Young MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:24 Sample: 2003 2010 Cross-sections included: 41 Total panel (unbalanced) observations: 202 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 3008581 1473161 2.04 0.04 Number of Active Borrowers -5.031263 1.660209 -3.03 0.00 DEPOSITS 0.374031 0.022798 16.41 0.00 Financial Rev / Assets -5507343 3033757 -1.82 0.07 Capital-Asset Ratio -3844717 794109.9 -4.84 0.00 Cost per Borrower 1723.778 6432.137 0.27 0.79 Return on Equity -27025.1 58133.67 -0.46 0.64 Debt-Equity Ratio 11480.59 10299.38 1.11 0.27 Borrowers per Staff -3500.286 3220.62 -1.09 0.28 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.905186 Adjusted R-squared 0.875441 S.E. of regression 1190702 Log likelihood -3084.556 Durbin-Watson stat 1.26657 Mean dependent var 2037593 S.D. dependent var 3373770 F-statistic 30.43108 Prob(F-statistic) 0

d.

Regression Results for Total Equity

The expected positive coefficient for outreach (number of active borrowers, deposits) was obtained. Old and young MFIs would increase their number of borrowers in order to achieve in an increase in outreach. However, for old MFIs, the number of depositors is not significant as the firm is able to generate funds through external sources and re-investment of yields. The

expected negative coefficient for financial self-sufficiency in managing assets (financial revenues over assets) was also achieved, but this variable is insignificant for both old and young firms. On the other hand, the capital to asset ratio is positive and significant for both old and young firms. The result from the financial self-sufficiency in managing assets shows that both old and young firms intend to increase equity through a combination of increasing the number of depositors and by increasing yields from loans. The debt-to-equity and return on equity ratios are not significant for young firms, as expected. But these indicators are not significant for older MFIs as well. This denotes that other indicators for financial self-sufficiency in managing debt 36

can explain decisions on total equity. MFI banks have other sources for equity unlike NGOs. The operational self-sufficiency indicators are not significant for both old and young MFIs as the increase in total equity cannot be explained by the productivity of the MFIs staff alone.

Table 11. Panel Regression Results for Total Equity


Dependent Variable: TOTAL EQUITY (Old MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:21 Sample: 2003 2010 Cross-sections included: 5 Total panel (unbalanced) observations: 36 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C -7508700 3053563 -2.46 0.02 Number of Active Borrowers 27.7827 2.607863 10.65 0.00 DEPOSITS 0.03133 0.045457 0.69 0.50 Financial Rev / Assets 1789489 4619669 0.39 0.70 Capital-Asset Ratio 12895588 4785569 2.69 0.01 Cost per Borrower 97609.64 8678.089 11.25 0.00 Return on Equity -2203460 2049848 -1.07 0.29 Debt-Equity Ratio -91996.25 135968.6 -0.68 0.51 Borrowers per Staff 8560.51 7482.793 1.14 0.26 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.973955 Adjusted R-squared 0.960367 S.E. of regression 752043.3 Log likelihood -530.1171 Durbin-Watson stat 1.789321 Mean dependent var 5084692 S.D. dependent var 3777582 F-statistic 71.67506 Prob(F-statistic) 0 Dependent Variable: TOTAL EQUITY (Young MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:24 Sample: 2003 2010 Cross-sections included: 41 Total panel (unbalanced) observations: 198 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C -485353 667480.4 -0.73 0.47 Number of Active Borrowers 14.69024 3.744255 3.92 0.00 DEPOSITS 0.200156 0.007179 27.88 0.00 Financial Rev / Assets -316886.3 1890557 -0.17 0.87 Capital-Asset Ratio 2494952 446955.9 5.58 0.00 Cost per Borrower 7261.923 879.772 8.25 0.00 Return on Equity -51219.31 68629.09 -0.75 0.46 Debt-Equity Ratio -7141.529 11745.11 -0.61 0.54 Borrowers per Staff -875.3869 878.8235 -1.00 0.32 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.951272 Adjusted R-squared 0.935575 S.E. of regression 506819.1 Log likelihood -2853.712 Durbin-Watson stat 0.900189 Mean dependent var 1896838 S.D. dependent var 1996758 F-statistic 60.60027 Prob(F-statistic) 0

The behavior of firms by age group is expected to vary, for objective 2. For example, the signs of the coefficients for return to equity and debt may differ for old and young firms. Both return to equity is expected to be positive for old firms, and the debt-to-equity ratio is expected to be negative and significant for old firms, due to equity financing as a mode to expand. e. Return on Assets

The expected results for outreach differ. The number of borrowers is expected to have a negative coefficient but this result is significant only for old MFIs. The average deposit balance

37

is expected to be positive for both MFIs but is significant only for young firms. Other factors seem to explain how outreach can improve profitability. The expected positive coefficient for financial self-sufficiency in managing assets (financial revenues over assets and the capital-asset ratio) was also achieved for young MFIs. Only the financial revenues over assets is significant for old MFIs. From the data, improving the liquidity of the MFI seems to have greater

explanatory power to improving returns on assets. The debt-to-equity and return on equity ratios are significant and positive for young firms, unexpectedly. Older firms have a positive and significant coefficient for equity returns but negative and significant for debt-equity ratio, as expected. This behavior shows that young firms try to achieve both an increase in debt and equity while they go through the consolidation phase in order to maintain their targeted profitability. (Financial self-sufficiency in managing debt) For operational self-sufficiency, portfolio at risk is negative and very significant for both old and young firms. The other indicators do not have significant results.

Table 12. Panel Regression Results for Return on Assets


Dependent Variable: Return on Assets (Old MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:53 Sample: 2003 2010 Cross-sections included: 5 Total panel (unbalanced) observations: 34 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C -0.052793 0.040723 -1.30 0.21 Number of Active Borrowers -1.22E-07 3.96E-08 -3.08 0.01 Ave Depos i t Ba l a nce per Income 0.139922 0.149747 0.93 0.36 Financial Revenues / Assets 0.232811 0.091497 2.54 0.02 Capital-Asset Ratio -0.010397 0.036842 -0.28 0.78 Cost per Borrower -6.90E-05 0.000255 -0.27 0.79 Return on Equity 0.105648 0.039267 2.69 0.01 Debt-Equity Ratio -0.002842 0.001094 -2.60 0.02 Portfolio at Risk 30 days -0.16922 0.084967 -1.99 0.06 Number of Depositos per Staff 0.000158 0.000154 1.03 0.32 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.917545 Adjusted R-squared 0.863949 S.E. of regression 0.009817 Log likelihood 117.9798 Durbin-Watson stat 1.432074 Mean dependent var 0.033974 S.D. dependent var 0.026616 F-statistic 17.11965 Prob(F-statistic) 0 Dependent Variable: Return on Assets (Young MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:24 Sample: 2003 2010 Cross-sections included: 41 Total panel (unbalanced) observations: 190 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C -0.103952 0.044717 -2.32 0.02 Number of Active Borrowers -1.68E-08 1.45E-07 -0.12 0.91 Ave Depos i t Ba l a nce per Income 0.053914 0.017675 3.05 0.00 Financial Revenues / Assets 0.295972 0.09759 3.03 0.00 Capital-Asset Ratio 0.074614 0.057329 1.30 0.20 Cost per Borrower -0.000137 0.000167 -0.82 0.41 Return on Equity 0.02121 0.009667 2.19 0.03 Debt-Equity Ratio 0.002253 0.001102 2.04 0.04 Portfolio at Risk 30 days -0.141988 0.062163 -2.28 0.02 Number of Depositos per Staff 0.000168 4.24E-05 3.96 0.00 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.751683 Adjusted R-squared 0.664773 S.E. of regression 0.031235 Log likelihood 417.9943 Durbin-Watson stat 1.988528 Mean dependent var 0.027831 S.D. dependent var 0.053947 F-statistic 8.648903 Prob(F-statistic) 0

38

f.

Yield on Gross Loan Portfolio

The expected results for outreach differ. The number of borrowers is expected to have a negative coefficient but this result is significant only for old MFIs. The average deposit balance is expected to be positive for both MFIs but is significant only for young firms. Other factors seem to explain how outreach can improve yield on gross loan portfolio. The expected positive coefficient for financial self-sufficiency in managing assets (financial revenues over assets and the capital-asset ratio) was achieved for young and old MFIs. From the data, improving the liquidity of the MFI seems to have greater explanatory power to improving yield on loans. The debt-to-equity and return on equity ratios are significant and negative for young firms, as expected. Older firms have a positive and significant coefficient for equity returns but negative and significant for debt-equity ratio, as expected. This behavior shows that young firms try to achieve both an increase in debt and equity while they go through the consolidation phase in order to maintain their targeted profitability but their current loan portfolio is not yet generating yields. (Financial self-sufficiency in managing debt) For operational self-sufficiency, portfolio at risk is negative and very significant for young firms but is positive for older firms. The other indicators do not have significant results. The positive result for older firms may indicate that they have a capacity to earn even when some micro firms have a high leverage.

39

Table 13. Panel Regression on Yield of Gross Loan Portfolio


Dependent Variable: YIELD ON GROSS LOAN PORTFOLIO (Old MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:52 Sample: 2003 2010 Cross-sections included: 5 Total panel (unbalanced) observations: 34 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 0.043574 0.163813 0.27 0.79 Number of Active Borrowers 1.30E-07 8.08E-08 1.61 0.12 Ave Depos it Balance per Income -0.698877 0.424757 -1.65 0.12 Financial Revenues / Assets 0.96622 0.337479 2.86 0.01 Capital-Asset Ratio 0.239738 0.14669 1.63 0.12 Cost per Borrower -0.001448 0.000897 -1.61 0.12 Return on Equity 0.168285 0.098219 1.71 0.10 Debt-Equity Ratio 0.01714 0.010058 1.70 0.10 Portfolio at Risk 30 days 1.092069 0.227356 4.80 0.00 Number of Depositors per Staff -0.00011 0.000448 -0.25 0.81 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.862924 Adjusted R-squared 0.773824 S.E. of regression 0.036796 Log likelihood 73.05709 Durbin-Watson stat 1.935398 Mean dependent var 0.5035 S.D. dependent var 0.077371 F-statistic 9.68494 Prob(F-statistic) 0.000006 Dependent Variable: YIELD ON GROSS LOAN PORTFOLIO (Young MFIs) Method: Panel Least Squares Date: 10/11/11 Time: 11:52 Sample: 2003 2010 Cross-sections included: 41 Total panel (unbalanced) observations: 190 White cross-section standard errors & covariance (d.f. corrected) Variable Coefficient Std. Error t-Stat Prob. C 0.105501 0.034819 3.03 0.00 Number of Active Borrowers -8.36E-07 1.12E-07 -7.45 0.00 Ave Depos it Balance per Income 0.111685 0.045637 2.45 0.02 Financial Revenues / Assets 0.896962 0.096421 9.30 0.00 Capital-Asset Ratio 0.245668 0.042122 5.83 0.00 Cost per Borrower -0.000239 0.00017 -1.40 0.16 Return on Equity -0.006075 0.001648 -3.69 0.00 Debt-Equity Ratio -0.001197 0.000522 -2.30 0.02 Portfolio at Risk 30 days -0.158685 0.076725 -2.07 0.04 Number of Depositors per Staff 0.000117 6.44E-05 1.82 0.07 Effects Specification : Cross-section fixed (dummy variables) R-squared 0.967273 Adjusted R-squared 0.955818 S.E. of regression 0.035556 Log likelihood 393.3754 Durbin-Watson stat 1.650009 Mean dependent var 0.416047 S.D. dependent var 0.169158 F-statistic 84.44465 Prob(F-statistic) 0

Like the results on growth trajectories, the expected results for the profitability ratios are consistent with the life cycle model suggested by Reid (2003)

A summary of the results by objective is presented in Table 14.

40

Table 14. Summary of Results


Objective Old MFIs (Data available from 1996 to 2010) Young MFIs (Data available from 2003 to 2010)

Over-all, the life-cycle model has good explanatory power on the behavior of MFIs across their growth phase. The outreach and financial self-sufficiency indicators for managing debt and assets have satisfactory explanatory power for total assets but with varying results for operational self-sufficiency. Objective 1. Use of a Life Only the financial self-sufficiency indicators for managing assets have satisfactory Cycle Model explanatory power for gross loan portfolio, total borrowing and total equity. to Explain Growth and Consolidation The return to equity and debt-equity ratios As expected, the return to equity and debt(financial self-sufficiency inmanaging equity ratios are not significant when debt) have good explanatory power for explaining gross loan portfolio, total assets, total assets, total borrowings, total equity total borrowings and total equity for young and gross loan portfolio for old MFIs. MFIs. The financial self-sufficiency indicators for managing debt and assets have very good explanatory power for young and old MFIs. Objective 2. Performance Indicators: Profitability and Yield on Loans The operational self-sufficiency indicator, portfolio at risk 30 days, is the only consistent indicator for both types of firms. The expected behavior of firms on debt financing (via internally generated funds) and equity financing (after re-investments have been made during the growth phase) are all able to explain the behavior of old and young MFIs as regards profitability and yield on loans in order to pay dividends to shareholders.

6.

Conclusion The life cycle model is useful in explaining variations in the decision of small firms as

regards their financial and operational performance. Microfinance Institutions are not micro in size, but they deal with a lot of micro firms. Their financial decisions are closely related to the financial decisions and behavior of small firms. The decisions of MFIs can be known through their reported financial variables. Young and old MFIs manage their assets and debt through a close monitoring of the financial self-sufficiency indicators: capital-asset ratio and financial revenues over assets.

Operational self-sufficiency is achieved through a close monitoring of the portfolio at risk 30 days variable. 41

As predicted by the model, young MFIs resort to debt financing, i.e. internally generated funds. Yield on loans is low and equity is not growing as fast as assets. Profitability is not a priority during the growth-consolidation phase. Once an MFI goes beyond the consolidation phase and enters the second growth stage, equity financing is resorted to because the old MFI has sufficiently re-invested yields on loans to creditors in their previous growth phase. Debt decreases while equity increases. In this phase, returns to equity is positively related to total assets, total equity and total borrowings, returns on assets and yields on the gross loan portfolio. For older MFIs, the debt-equity ratio is negatively related to total assets, total equity and total borrowings, as well on the profitability indicators of asset returns and yields on loans. Commercial investors can therefore predict the future performance of MFIs through a close monitoring of their reported financial indicators. However, as of 2010, only 46 MFIs have been regularly submitting their financial figures from a total 87 listed MFIs in the MIX Portal. Once the other 41 firms, are able to complete a larger data set, then the analysis of performance can extend not only by age, but also in terms of organizational structure, that is, rural bank or NGO with lending mechanisms of either group, individual or a combination. Micro firms and microfinance institutions definitely seem to follow the behavior of profit-oriented small businesses.

42

References: Charitonenko, Stephanie (2003) Commercialization of Microfinance: The Philippines, Asian Development Bank: Manila. Chittenden, Francis, Graham Hall, Patrick Hutchinson (1996) Small Firm Growth, Access to Capital Markets and Financial Structure: Review of Issues and an Empirical Investigation, Small Business Economics, Vol. 8, No. 1, Special Issue on Financing and Small Firm Dynamics (Feb., 1996), pp. 59-67 (http://www.jstor.org/stable/40228760. Accessed: 01/08/2011 at 23:30) De Aghion, Beatriz Armendriz (1999) On the design of a credit agreement with peer monitoring, Journal of Development Economics, Vol. 60, pp. 79104. (http://www.economics.harvard.edu/faculty/armendariz/files/design.pdf. Accessed: 07/08/2011 at 17:01) Karlan, Dean S. and Jonathan Morduch (2009) Access to Finance, Chapter 2. Handbook of Development Economics. Dani Rodrik and Mark Rosenzweig, (eds). Elsevier: North Holland. Volume 5. Karlan, Dean S. and Jonathan Zinman (2010) Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts. Review of Financial Studies 23(1): 433-464 Karlan, Dean S. and Nathaniel Goldberg (2011) Microfinance Evaluation Strategies: Notes on Methodology and Findings, Beatriz Armedriz and Marc Labie, (eds) The Handbook of Microfinance. World Scientific Publishing, Co: Singapore. pp. 17-59 Krauss, Nicolas and Ingo Walter (2009) Can Microfinance Reduce Portfolio Volatility. Economic Development and Cultural Change, Vol. 58, No. 1, (October) Meagher, Patrick, Pilar Campos, Robert Peck Christen, Kate Druschel, Joselito Gallardo, and Sumantoro Martowijoyo (2006) Microfinance Regulation in Seven Countries: A Comparative Study," Report submitted to Sa-Dhan, New Delhi, IRIS Center, University of Maryland. (http://www.microfinancegateway.org/gm/document-1.9.24382/26.pdf. Accessed: 07/08/2011 at 17:12) Modigliani, Franco and Merton H. Miller (1963) Corporate Income Taxes and the Cost of Capital: A Correction, The American Economic Review, Vol. 53, No. 3 (Jun., 1963), pp. 433-443. (http://www.jstor.org/stable/1809167. Accessed: 02/08/2011 at 11:14) Modigliani, Franco and Merton H. Miller (1958) The Cost of Capital, Corporation Finance and the Theory of Investment, American Economic Review, Vol. 48, No. 3 (Jun., 1958), pp. 261297 ( http://www.jstor.org/stable/1809766. Accessed: 02/08/2011 at 11:14) Myers, Stewart C. (1984) The Capital Structure Puzzle, Journal of Finance, Vol. 39, No. 3, Papers and Proceedings, Forty-Second Annual Meeting, American Finance Association, San 43

Francisco, CA, December 28-30, 1983 (Jul., 1984), pp. 575-592. (http://www.jstor.org/stable/2327916. Accessed: 02/08/2011 at 00:07) Reid, Gavin C. (1991) Staying in Business, International Journal of Industrial Organization, Vol. 9, pp. 545-556. Reid, Gavin C. (1996) Financial Structure and the Growing Small Firm: Theoretical Underpinning and Current Evidence, Small Business Economics, Vol. 8, No. 1, Special Issue on Financing and Small Firm Dynamics (Feb., 1996), pp. 1-7 (http://www.jstor.org/stable/40228754. Accessed: 31/07/2011 at 00:19). Reid, Gavin C. (1999) Capital Structure at Inception and the Short-Run Performance of MicroFirms, Chapter 7, in Entrepreneurship, Small and Medium-Sized Enterprises and the Macroeconomy, Zoltan J. Acs, Bo Carlsson and Charlie Karlsson, editors., Cambridge, United Kingdom: Cambridge University Press, pp. 186-205 (http://www.google.com/books?hl=en&lr=&id=un1JmcFa4QIC&oi=fnd&pg=PA186&ots=Z yPAWEo4cC&sig=B6EH8S72S58T8fh8flO8rfX_F1w#v=onepage&q&f=false. Accessed: 09/08/2011 at 12:06) Reid, Gavin C. (2003) Trajectories of Small Business Financial Structure, Small Business Economics, Vol. 20, No. 4 (Jun., 2003), pp. 273-285 (http://www.jstor.org/stable/40229267. Accessed: 31/07/2011 at 00:20) Tze-Wei Fu, Mei-Chu Ke, Yen-Sheng Huang (2002) Capital Growth, Financing Source and Profitability of Small Businesses: Evidence from Taiwan Small Enterprises, Small Business Economics, Vol. 18, No. 4 (Jun., 2002), pp. 257-267 (http://www.jstor.org/stable/40229208. Accessed: 31/07/2011 at 00:17) Vickers, D. (1987) Money Capital in the Theory of the Firm. Cambridge: Cambridge University Press.

44

Appendix 1: Philippines Microfinance Performance Standards (P. E. S. O.)

45

46

Appendix 2. Database
Average deposit balance per depositor / GNI per capita Depositors per staff member Debt to equity ratio Borrowers per staff member Financial revenue/ assets Capital/asset ratio Cost per borrower Diamonds

1st Valley Bank Rural Bank1

ABS-CBN NGO1

ASA NGO2

ASHI NGO3

ASKI NGO4

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

13.00% 16.00% 29.00% 38.00% 48.00% 18.00% 26.00%

158 150 176 185 207 199 127 133 142 130 128 81 86

15.98% 13.91% 14.34% 12.00% 11.95% 13.40% 11.64% 13.14% 61.29% 57.38% 57.51% 42.56% 51.77% 63.11%

53 62 70 76 72 81 83 103

5.26 6.19 5.97 7.33 7.37 6.46 7.59 6.61 0.63 0.74 0.74 1.35 0.93 0.58

305 271 175 179 193 331 232 252 0 130 128 81 86

4684848 7074579 10914232 17186558 30154412 32864744 43451642 58204992

Deposits

Year

MFI

4 4 4 4 4 4 4 4 4 4 4 4 4 4

21.87% 21.25% 25.40% 22.78% 19.62% 22.17% 19.87% 16.80%

3.00% 3.00% 5.00% 3.00% 2.00%

37 50 75 110

1214878 1718940 3120455 2385149 1387481

43.66% 48.14% 43.79% 51.14% 47.53%

1.00% 2.00% 3.00% 3.00% 2.00% 2.00%

41 107 144 179 177 209 234 115 93 98 95 97 118 135 96 102 114 140 96 97 93 87

90.47% 46.34% 28.27% 21.12% 23.62% 19.30% 17.01% 52.08% 41.31% 47.07% 35.61% 33.91% 28.88% 26.94% 20.43% 27.49% 19.12% 17.29% 16.53% 11.93% 14.11% 13.98%

37 33 31 30 28 28

0.11 1.16 2.54 3.73 3.23 4.18 4.88 0.92 1.42 1.12 1.81 1.95 2.46 2.71 3.89 2.64 4.23 4.78 5.05 7.38 6.09 6.16

62 16239 116 302592 159 1198165 192 3643515 186 4131319 210 7098945 234 12055330 115 108 116 111 112 117 135 0 0 0 115 124 136 41 101 281598 387958 497858 700615 1025481 1262711 1361266

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

44.36% 53.64% 49.00% 48.15% 54.84% 53.55%

2.00% 2.00% 3.00% 3.00% 3.00% 4.00%

3.00% 3.00% 3.00% 9.00% 3.00%

49 56 68 77 65 58 24 28 36 38 51 63 77 84

1680182 2190185 2761281 2974994 3402799

32.36% 31.83% 28.99% 27.53% 24.80% 19.51% 38.54% 41.63% 39.19% 35.63% 34.13% 35.35% 32.56% 30.12%

47

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

Bangko S de Libon Rural Bank2

Bangko Kabayan Rural Bank3

Bangko Mabuhay Rural Bank4

BCB Rural Bank5

Cantilan Bank Rural Bank6

10

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

4.00% 5.00% 6.00% 5.00% 8.00% 7.00% 35.00% 31.00% 39.00% 37.00% 30.00% 36.00%

63 93 79 74 91 96 20 46 51 45 53 34 44 48 57 49 51 52 54 57 141 147 159 130 152 46

48.00% 55.00% 49.00% 32.00% 37.00%

15.21% 15.40% 16.81% 17.72% 17.84% 18.41% 18.64% 22.34% 14.11% 16.20% 15.49% 16.84% 18.15% 18.83% 18.94% 20.04% 10.64% 10.73% 11.67% 11.31% 12.21% 12.79% 12.91% 16.13% 16.80% 15.87% 19.63% 19.24% 14.99% 15.30% 14.62% 12.00% 14.19% 15.77% 16.56% 17.44% 15.58%

40 49 53 51 44 51 253 172 166 250 258 267 261 238 223 271 298 327 286

5.57 5.49 4.95 4.64 4.61 4.43 4.37 3.48 6.09 5.17 5.46 4.94 4.51 4.31 4.28 3.99 8.39 8.32 7.57 7.84 7.19 6.82 6.74 5.2 4.95 5.3 4.09 4.2 5.67 5.54 5.84 7.33 6.05 5.34 5.04 4.74 5.42

150 174 164 164 175 162 375 267 256 194 233 199 194 244 223 223 195 235 244 272 359 334 299 298 222 218

1133794 1426355 2069675 2016260 2552543 2712712 15773286 18211977 21119973 29127757 27066649 29700683 32464867

9275249 11069807 14761724 13816760 16612795

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

34.09% 38.96% 36.01% 28.31% 29.33% 30.89% 29.30% 12.87% 13.47% 12.86% 13.04% 13.12% 11.87% 11.06% 13.50% 11.32% 11.78% 12.12% 12.47% 12.25%

6.00% 6.00% 9.00% 6.00%

49 49 59 72 114

1380020 1758857 2239737 2297166 2457187

28.10% 29.37% 27.11% 23.72% 25.13% 23.61% 34.95% 34.10% 32.72% 30.31% 29.91% 30.40% 26.29%

6.00% 7.00% 8.00% 10.00% 8.00% 11.00%

84 115 114 119 107 101 67 82

89 76 75 99 114 109

250 313 3630789 288 4133871 285 5872998 255 8768774 264 8487364 174 10703331 237 13869242

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

48

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

Card Bank Rural Bank7

11

Card NGO NGO5

12

CBMO Rural Bank8

13

CEVI NGO6

14

CMEDFI NGO7

15

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

13.00% 12.00% 16.00% 9.00% 7.00% 4.00% 4.00% 2.00% 2.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00%

155 128 117 136 164 167 152 163 159 146 142 146 185 157 177 110 88 64 151 157 141 137

16.02% 23.10% 19.64% 23.96% 18.67% 15.57% 12.43% 12.75% 32.61% 45.62% 44.29% 34.94% 25.84% 23.38% 24.79% 20.94% 22.66% 22.79% 24.91% 25.20% 20.62% 20.84%

65 55 57 62 51 45 47 54 28 30 32 35 42 37

5.24 3.33 4.09 3.17 4.36 5.42 7.04 6.84 2.07 1.19 1.26 1.86 2.87 3.28 3.03 3.78 3.41 3.39 3.01 2.97 3.85 3.8

165 131 117 173 164 206 254 302 171 160 157 173 185 169 177 385 298 108 315 217 267 262

4472154 3589562 4956479 6169383 12201804 16817850 27645798 35083134 1717279 2238633 3523477 5797649 11928227 14741166 18980596 23260224

15.00% 6.00% 10.00% 7.00% 8.00%

56 76 63 51 56 58

2677050 3322147 4607497 5376701 6291840

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

35.98% 34.60% 33.56% 35.57% 36.39% 41.67% 39.21% 34.77% 27.96% 25.75% 34.57% 36.32% 37.22% 42.15% 39.11%

20.96% 22.49% 21.48% 20.75% 19.72% 19.32%

1.00% 1.00% 1.00% 1.00% 1.00% 2.00% 3.00% 3.00% 3.00% 4.00% 4.00% 3.00% 3.00% 2.00%

186 53.80% 157 60.25% 127 50.42% 141 47.60% 114 34.40% 131 33.27% 135 21.40% 115 -20.96% 128 -12.86% 110 2.41% 70 8.27% 71 13.40% 73 20.68% 73 28.08% 102 31.96%

25 32 37 51 45 51 30 29 28 43 65 79 79 69

0.86 0.66 0.98 1.1 1.91 2.01 3.67 -5.77 -8.78 40.45 11.09 6.46 3.83 2.56 2.13

186 157 136 144 139 140 115 106 110 70 80 88 86 128

190857 202813 237922 454410 656456 716678 1170985 128572 169448 240306 320640 525732 457547 525541 699987

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

32.17% 26.51% 30.85% 33.24% 32.61% 32.73% 70.75% 61.46% 65.93% 60.23% 61.89% 56.84% 48.48% 54.63%

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

49

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

DSPI Grameen NGO8

16

ECLOF-RP NGO9

17

FAIR Bank Rural Bank9

18

FICO Rural Bank (Coop)10

19

First Macro Bank Rural Bank11

20

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

1.00% 1.00% 3.00%

1.00% 1.00% 3.00% 3.00% 4.00%

237 208 219 230 183 222 100 284 357 171 121 117 106 81 77 98 123 112 120 109 84 61 78 69 61 71 78 93 86 86 70 49 53 46 50 49 50

39.55% 38.67% 31.39% 25.74% 20.30% 10.98% 10.56% 13.44% 75.88% 91.87% 70.64% 67.53% 61.87% 58.02% 60.62% 15.97% 14.53% 13.24% 11.49% 12.47% 13.21% 16.39% 19.91% 22.34% 21.87% 20.04% 18.46% 15.42% 13.93% 9.99% 10.38% 9.56% 10.42% 9.60% 9.59% 10.44%

21 18 20 20 19 22 22 25 46 59 65 94 150

1.53 1.59 2.19 2.89 3.93 8.1 8.47 6.44 0.32 0.09 0.42 0.48 0.62 0.72 0.65 5.26 5.88 6.55 7.7 7.02 6.57 5.1 4.02 3.48 3.57 3.99 4.42 5.48 6.18 9.01 8.64 9.46 8.6 9.42 9.43 8.58

0 0 0 0 183 222 100 119 0 0 121 117 91 81 77 251 280 328 359 225 103 90 127 141 127 98 105 109 92 95 550 412 360 329

562155 690325 823995 1099176 0 37678 100075 201690 258390 363123

3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3

40.59% 33.85% 39.33% 34.59% 27.75% 30.60% 31.69% 20.04% 19.92% 26.61% 23.95% 28.42% 26.76%

4.00% 6.00% 6.00%

27 25 28 57 83 97

4814042 4537068 3526756

37.20% 36.86% 37.28% 36.81% 36.54% 28.86%

17.00% 21.00% 36.00% 40.00% 36.00% 46.00%

102 130 153 166 138 126

3240315 4515235 6883351 11334229 15905985 20545827 28343214

26.43% 24.88% 23.17% 22.41% 20.22% 19.39%

14.00% 16.00% 13.00% 15.00% 17.00%

141 143 152

207

8573078 11445521 305 10392415 280 10785361 240 12693514

15.99% 15.57% 14.53% 14.24% 15.58% 15.54%

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

50

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

Green Bank Rural Bank12

21

HSPFI NGO10

22

Kasagana-Ka NGO11

23

Kazama Grameen Grameen NGO12

24

KBank Bank13

25

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

7.00% 10.00% 10.00% 6.00% 8.00%

136 137 97 116 106 98 1,040 70 261 278 223 219 201 205

14.46% 12.97% 12.42% 15.25% 14.97% 13.56% 10.72%

71 66 69 98 127 130

5.91 6.71 7.05 5.56 5.68 6.37 8.33

340 365 286 259 279 325 3,169 230 0 0 0 222 201 205 230 269 254 142 132 135

18248077 21654758 30416578 27417704 29274087 31740116

4 4 4 4 4 4 4 4

27.83% 24.88% 23.30% 22.54% 25.17% 23.53%

1.00% 1.00%

28.82% 30.20% 29.63% 31.87% 29.80% 19.15% 20.52% 22.48% 26.96% 20.43% 22.43% 30.46% 34.13% 35.21% 45.21% 45.14% 42.01% 34.97% 30.21% 37.96%

11 17 26

2.47 2.31 2.38 2.14 2.36 4.22 3.87 3.45 2.71 3.89 3.46 2.28 1.93 1.84 1.21 1.22 1.38 1.86 2.31 1.63

286159 313287 404840 137627 192558 273806 444621 547047 662802 840255

3 3 19.39% 3 3 21.40% 3 26.17% 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4

2.00% 1.00% 1.00% 3.00% 2.00% 2.00%

230 171 126 142 132 135 126 140 152 134 130 115 144 206

20 29 48 49 48 51

57.73% 57.22% 55.13% 61.10% 59.59% 56.53%

3.00% 3.00% 3.00% 3.00% 3.00% 5.00%

28 36 46 51 50 52

152 134 130 115 131 115

676191 959057 1202559 1228545 1130594 1542862

40.68% 39.89% 34.11% 37.05% 34.17% 42.41%

70.00% 14.00% 4.00%

114 109 73 67

60.01% 45.84% 42.63% 37.26% 31.56%

53 67 73 106

0.67 1.18 1.35 1.68 2.17

15 55 99

2024852 2867897 2790766 5788582

3 3 3 3 3

34.70% 32.00% 34.75% 40.09%

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

51

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

KCCDFI NGO13

26

KMBI NGO14

27

Life Bank Found NGO15

28

Mallig Plains RB Rural Bank14

29

MILAMDEC NGO16

30

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 3.00% 3.00% 3.00% 2.00% 2.00%

2.00% 2.00% 2.00% 2.00%

111 95 131 130 110 122 164 169 174 151 166 156 171 183 108 198 160 136 167 181 182

44.08% 11.69% 9.60% 18.68% 17.13% 15.66% 41.35% 27.58% 42.52% 53.72% 49.93% 54.11% 49.96% 45.18% -3.78% 15.85% 26.59% 24.66% 25.48% 33.59%

40 39 48 56 63 34 30 28 31 40 46 43 44 22 23 36 32 30

1.27 7.55 9.41 4.35 4.84 5.39 1.42 2.63 1.35 0.86 1 0.85 1 1.21 -27.43 5.31 2.76 3.06 2.92 1.98

95 134 130 112 129 164 169 189 163 178 170 181 14 132 207 169 147 174 192 188

422726 711827 805018 764736 1061257 644675 1738138 2826205 3305318 5139118 4809895 6321167 8858497

1992409 4540080 7810739 8655485

4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3

57.12% 49.37% 67.54% 52.33% 44.34% 37.38% 49.00% 60.64% 49.37% 46.46% 49.56% 52.68% 62.08% 56.75% 62.27% 70.71% 55.37% 60.26%

9.00% 8.00% 10.00% 9.00% 12.00% 12.00% 2.00% 2.00% 2.00% 1.00% 1.00%

143 131 134 132 124 111 98 111 116 177 116

14.48% 14.25% 14.59% 15.96% 16.70% 18.07% 19.06% 39.09% 26.89% 24.93% 16.64% 16.10%

41 44 49 56 60 71 27 26 23

5.9 6.02 5.85 5.26 4.99 4.53 4.25 1.56 2.72 3.01 5.01 5.21

196 174 162 155 133 121 109 120 125 166 158

3397185 3403408 4852589 4804217 5131819 6121712 286387 318166 428540 689227 710903 869817

4 4 4 4 4 4 4

21.66% 20.26% 20.70% 21.45% 22.62% 20.40%

4 4 36.97% 4 35.57% 4 4 32.87% 4

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

52

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

RBVictorias Rural Bank15

31

NWTF Grameen NGO17

32

OK Bank Bank16

33

PALFSI NGO18

34

PBC Rural Bank17

35

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009 2010

26.00% 24.00% 22.00% 23.00% 33.00% 14.00% 20.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 3.00% 3.00% 6.00% 6.00% 9.00% 7.00%

41 52 62 65 68 66 42 115 126 131 123 144 147 155 153 163 144 132 162 93 75 67 60 154 147 137 158 147 236 175 149

19.91% 23.88% 20.21% 22.09% 21.67% 18.90% 22.47% 22.75% 19.08% 15.05% 15.71% 15.06% 16.25% 27.63% 28.09% 43.52% 45.12% 42.31% 43.57% 38.73% 37.86% 31.56% 26.75% 23.29% 24.88% 16.68% -5.45% -7.70% -5.40% 18.39% 18.26% 18.33% 14.85% 13.47% 12.34% 13.10% 14.96%

127 107 104 109 131 161 30 30 33 37 37 40 38 41 43 35 42 43 55 86 137 115

4.02 3.19 3.95 3.53 3.62 4.29 3.45 3.4 4.24 5.64 5.37 5.64 5.15 2.62 2.56 1.3 1.22 1.36 1.3 1.58 1.64 2.74 3.29 3.02 4.99 -19.33 -14 -19.53 4.44 4.48 4.46 5.74 6.42 7.1 6.63 5.68

105 107 107 90 67 108 97 115 126 131 127 151 147 166 140 114 98 94 92 77 35 154 147 137 158 147 236 91 105

1399452 1465809 1761957 1820488 2135266 1681693 2031470 1564346 1381568 1845325 2069482 3082715 2735030 2974798 6203178 849851 713683 1517841 1167939 2229188 1843692 5788582 5692179 318714 413081 546107 721052 916014 0

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

30.45% 28.32% 23.60% 24.96% 25.01% 27.08% 25.35% 32.68% 30.39% 31.32% 30.60% 26.91% 30.96% 28.67% 26.13% 41.03% 34.28% 25.02% 21.09% 22.80% 23.74% 46.86% 33.98%

2.00% 3.00% 2.00% 2.00% 2.00% 0.00%

34 36 36 36 30 20 26

32.02% 26.39% 30.54% 24.63% 25.68% 25.83% 27.41% 24.29% 23.31% 25.71% 24.55% 24.06%

8.00% 5.00% 5.00%

150 111

45 47

194 194

4672512 5199932 6525626 8674082

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

53

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

RBDigos Rural Bank18

36

RBMabitac Rural Bank19

37

RBMontevista Rural Bank20

38

RBOroquieta Rural Bank21

39

RBSolano Rural Bank22

40

2003 2004 2005 15.00% 2006 14.00% 2007 24.00% 2008 13.00% 2009 16.00% 2010 2003 2004 2005 17.00% 2006 22.00% 2007 27.00% 2008 15.00% 2009 17.00% 2010 15.00% 2003 2004 2005 2006 2007 4844.00% 2008 4.00% 2009 5.00% 2010 2003 2004 2005 34.00% 2006 18.00% 2007 39.00% 2008 28.00% 2009 38.00% 2010 2003 2004 2005 33.00% 2006 45.00% 2007 47.00% 2008 37.00% 2009 2010

109 88 93 101 100 125 86

15.08% 12.80% 12.29% 11.61% 12.65% 12.62% 14.75%

96 103 127 136 149 159

5.63 6.81 7.14 7.61 6.9 6.92 5.78

429 313 287 343 233 364 260

3266088 4584791 6335500 6130449 6637891

4 4 4 4 4 4 4

22.42% 21.07% 21.61% 19.40% 20.58% 20.10%

48 69 66 65 91 113 262 237 217 260 139 107

11.14% 12.36% 12.53% 11.51% 12.07% 13.18% 11.59% 11.34% 8.45% 8.40% 8.73% 9.76% 12.47%

102 95 106 92 72

7.98 7.09 6.98 7.69 7.29 6.59

159 130 128 127 166 0 1 1 1 336 313

2746515 3427073 4879072 4938977 5880386 6292141

7.63 54 7.82 58 10.83 71 10.91 10.45 9.24 54 7.02

5037459 4753476 5170205

4 4 4 4 4 4 4 3 3 3 3 3 3 3

18.68% 18.13% 15.74% 18.82% 20.31%

20.96% 23.47% 23.67% 22.03% 24.67% 23.09%

54 94 97 113 125 112 227 206 195 183 147 122 139

15.82% 10.95% 10.33% 10.24% 10.82% 12.53% 16.54% 20.33% 23.97% 28.32% 27.68% 31.50% 33.15%

107 111 136 133 109

5.32 8.13 8.68 8.76 8.24 6.98 5.05 3.92 3.17 2.53 2.61 2.17 2.02

216 491 301 279 202 261 244 255 191 165 112

2869674 4387067 6262897 5491888 5595478

4 4 4 4 4 4 4 4 4 4 4 4 4

15.22% 15.36% 12.63% 13.75% 14.00%

45 51 63 79 89 79

2981197 3285766 4248929 3331289 3440525

21.23% 18.43% 17.70% 12.88% 15.55% 13.73%

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

54

Average deposit balance per depositor / GNI per capita

Depositors per staff member

Debt to equity ratio

Borrowers per staff member

RBTalisayan Rural Bank23

41

RSPI NGO19

42

Serviamus NGO20

43

TSKI NGO21

44

TSPI NGO22

45

ValiantRB Rural Bank24

46

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

6.00% 7.00% 8.00% 10.00% 9.00% 12.00%

92 88 98 109 112 126 140

13.72% 14.60% 13.29% 13.71% 13.78% 14.57% 17.64%

47 51 52 60 66 55

6.29 5.85 6.52 6.29 6.26 5.86 4.67

184 186 187 178 153 144

1557460 2048947 2494935 3687821 3898635 4022623

4 4 4 4 4 4 4

28.47% 28.72% 28.12% 28.40% 30.89% 26.12%

2.00% 2.00% 2.00%

98 141 179 146 161 130 140 154 108 114 136 124 149 153 126 132 144 113 92 80 78 68 125 154 122 132 112 132 130 114 88 55 50 52 70 100

16.54% 18.32% 18.23% 21.51% 25.96% 34.81%

35 32 36 40 43

5.05 4.46 4.49 3.65 2.85 1.87

0 0 0 146 161 151 155

303512 478685 696489 828143 1194839

3 3 3 3 3 3 3 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

51.92% 53.25% 48.04% 51.30% 54.72%

4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 2.00% 3.00% 3.00% 2.00% 2.00% 3.00% 3.00% 4.00% 4.00% 4.00% 3.00% 3.00%

120.00% 118.00% 146.00% 83.00% 93.00%

30.78% 42.63% 53.17% 50.56% 48.56% 48.93% 47.30% 11.18% 7.68% 11.26% 11.30% 14.36% 9.69% 16.23% 13.02% 39.97% 37.36% 35.40% 37.50% 47.46% 37.37% 29.53% 34.73% 11.32% 9.50% 8.44% 8.15% 8.15% 10.88% 10.81%

2.25 35 1.35 36 0.88 45 0.98 40 1.06 34 1.04 33 1.11 23 7.94 23 12.02 24 7.88 38 7.85 47 5.96 54 9.32 50 5.16 61 6.68 33 1.5 34 1.68 42 1.83 49 1.67 65 1.11 55 1.68 49 2.39 59 1.88 7.83 9.53 76 10.85 110 11.27 123 11.28 109 8.19 70 8.25

22 115 138 124 149 153 126 145 163 133 114 108 125 6 154 183 154 155 139 132 130 114

455268 427429 471223 512122 665160 2713559 4748289 5230200 7882478 10437713 7614672 9556128 11580409 3140876 4165182 6336226 8411381 9919521 10573869 13800938 17502088

40.20% 30.55% 30.29% 28.70% 27.11% 29.65% 33.10% 29.95% 35.19% 35.91% 33.30% 33.62% 33.13% 34.66% 39.57% 41.72% 44.12% 39.38% 46.09% 40.95% 41.75% 45.46% 8.57% 8.37% 8.77% 8.51% 10.61% 10.58%

71 78 66 76 101

7344224 13132801 20571628 21210769 27393119

Source: MIX Market Information Portal for the Philippines (http://www.mixmarket.org/mfi/country/Philippines ) 55

Financial revenue/ assets

Capital/asset ratio

Cost per borrower

Diamonds

Deposits

Year

MFI

Portfolio at risk &gt; 30 days

1st Valley Bank Rural Bank1

ABS-CBN NGO1

ASA NGO2

ASHI NGO3

ASKI NGO4

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

7188694 10906346 15729638 22440332 36018303 45548689 55827098 66351843 2445826 2560717 4092116 7666327 5196341 3001218

17973 13.44% 21350 5.03% 30239 4.51% 34225 5.07% 42064 4.61% 57609 0.26% 52939 10.48% 63676 11.39%

2.42% 2.96% 4.08% 2.64% 2.58% 2.74% 2.66% 2.37%

14.03% 20.08% 28.83% 20.48% 21.53% 21.58% 21.55% 19.00%

8971220 13077794 18906315 30051929 51752800 55913198 81916455 98938243 3544137 4346227 6177043 10866471 6547273 4561358

2141103 1433285 3777788 1818749 4544748 2711903 8066998 3605835 13139345 6184382 12732115 7492439 22751385 9532162 24140133 13000583 130671 419397 632782 2553964 518990 0 2172274 2493747 3552675 4624297 3389777 2878790

26.52% 25.08% 27.55% 28.50% 26.79% 28.63% 26.20% 24.56%

38422 37434 12.54% 1.78% 39756 9.86% 8.19% 35767 3.47% 5.34% 39991 18.14% -10.93% -5.06%

3.01% 14.25% 11.14% -23.74% -8.97%

66.20% 66.92% 59.92% 62.18% 55.90%

71049 519967 2068824 6703310 7943399 13861339 24452395 937985 1490841 1837340 3024357 3265812 3816893 5213312 1275487 1427716 2502414 4232591 6108855 8622392 9589716 13611877

980 9954 28848 65505 97409 179626 299433

0.00% 0.81% -9.05% 0.70% 0.03% 1.09% 10.80% 0.14% 4.72% 0.01% 6.83% 0.03% 6.17%

-16.50% 0.08% 47.41% 21.11% 32.74% 34.59%

175580 734184 2266451 7546177 7249033 12675654 21781649

87398 311988 1605078 455268 1601813 2870196

158847 340207 640687 1593869 1712181 2446104 3705639 787793 968109 1306693 1817762 1787104 1946547 2377569 472763 705719 905008 1421015 1603418 1632647 2204327 2940195

67.34% 61.70% 53.08% 47.26% 48.71% 46.13%

12065 3.72% 11466 2.41% 12194 2.31% 13438 1.59% 14932 2.40% 19129 2.26% 22196 1.90% 22573 13.81% 25352 4.25% 35453 3.43% 47077 5.81% 38942 6.12% 41303 6.79% 41451 9.69% 48094 6.02%

-4.50% 2.66% 0.98% 1.17% 0.53% -1.45% 6.21% 1.74% 1.60% 0.92% 0.29% 2.09% 1.65% -0.05%

-9.89% 5.99% 2.46% 3.35% 1.70% -5.22% 32.35% 7.20% 7.26% 5.11% 1.70% 15.07% 12.62% -0.33%

1512620 418733 2343606 898136 2776020 870870 5104971 2343949 5270753 2190375 6740393 3249349 8826259 4769212 2313627 2567102 4734332 2170238 8219546 4507427 9699603 4727863 13684113 7625638 15623705 9278068 21038757 12731255

49.91% 48.68% 45.19% 43.85% 40.84% 33.97%

60.46% 54.75% 53.34% 50.18% 38.30%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

56

Portfolio at risk &gt; 30 days

Bangko S de Libon Rural Bank2

Bangko Kabayan Rural Bank3

Bangko Mabuhay Rural Bank4

BCB Rural Bank5

Cantilan Bank Rural Bank6

10

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

562292 852201 1218386 1356155 1817894 1886339 2864502 3460062 6136011 6670379 9785806 11320851 14641207 17075123 19049943 23046811 2523744 2866330 3068685 4058789 6263640 6148969 7734643 1969336 2289177 2875952 3081343 4387351 5074220 5509136 4094752 5160630 5848665 6690246 10108187 9992766 13663362 17091535

5376 10669 9333 9455 10709 11066 10884 2493 6655 9288 9234 11149 8135 11029 11145 2365 3491 3363 3912 4193 5042 5526

11.82% 23.30% 28.69% 8.29% 16.54% 16.28% 5.35% 7.51% 6.57% 6.80% 0.06% 6.35% 3.22%

5.09% 5.18% 2.45% 3.42% 2.92% 4.41% 5.48% 2.98% 2.57% 3.12% 2.74% 2.87% 3.00% 2.31% 1.97% 1.76% 2.19% 2.25% 1.99% 1.89%

33.21% 32.02% 14.15% 19.25% 16.13% 23.78% 26.56% 19.63% 16.26% 19.27% 15.55% 15.56% 15.87% 11.85% 18.45% 15.63% 19.04% 19.04% 15.91% 14.73%

9.51% 9.83% 13.07% 0.64% 4.98%

908176 1266744 1595175 2112935 2966625 2931388 3722501 4348783 18745449 19231937 23558085 27290919 37805049 35265016 40103804 44557600 8287877 9546872 11246051 12845357 17092172 16534207 19570667 2775627 3262360 4134564 4741776 6226243 6862722 8123682 5123221 5887265 6906572 8350308 11914664 12845756 17761806

83143 72056 225568 239683 243752 294235 474638 177824 54030 472460 365314 1211240 1053075 2152661 2737395 0 0 105627 23547 378314 199134

138175 195111 268196 374434 529214 539637 693838 971446 2644277 3115269 3649269 4595589 6862875 6641200 7596530 8929109 882200 1024533 1312450 1453283 2087210 2115123 2527076 447793 547968 656247 930837 1197860 1028671 1242596 749192 706616 979770 1316514 1972519 2239665 2766928

52.21% 50.36% 42.67% 44.20% 41.21% 36.30% 26.29% 26.69% 22.57% 27.52% 24.84% 20.04% 18.83%

27.46% 29.84% 27.00% 27.06% 25.62%

7625 10467 10462 15.97% 9513 15.17% 10935 12.83% 4065 0.88%

5.06% 4.19% 4.32% 2.72% 2.96% 2.17% 3.06% 1.42% 1.36% 1.56% 2.47% 2.37% 2.90%

30.67% 25.74% 24.17% 14.03% 17.43% 14.30% 21.62% 10.76% 10.35% 10.34% 15.19% 13.93% 17.72%

1286308 1855077 1826363 2463997 3217773 3738157 776457 1260199 1339612 564113 718937 1521399 3205351

25.10% 32.82% 29.99% 34.35% 26.39%

13733 6.20% 17627 13.60% 19813 14.29% 21234 6.73% 22344 7.21% 21159 0.62% 22161 8.11% 20541 1.75%

38.49% 36.16% 34.43% 32.98% 34.35% 23.49%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

57

Portfolio at risk &gt; 30 days

Card Bank Rural Bank7

11

Card NGO NGO5

12

CBMO Rural Bank8

13

CEVI NGO6

14

CMEDFI NGO7

15

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

6132985 4876471 5096452 6930075 13230863 20138533 30996976 44713331 6087612 6826182 8596627 16105744 33840694 36624936 46207824 66808378 3287681 3673960 4708080 6057765 7691180 8952335 10501265

31090 26034 24955 40634 117195 205097 228460 267282 74182 73065 98194 159673 320299 364483 497441 684428 9817 11026 8224 19946 20846 22783 24029

10.95% 8.94% 12.10% 6.78% 3.20% 1.87% 1.50% 1.84% 5.47% 5.25% 4.24% 1.99% 0.49% 1.07% 1.02%

1.48% 1.88% 1.30% 4.88% 1.90% 2.11% 4.04% 3.57% 1.28% 3.65% 8.11% 9.56% 6.98% 6.63% 6.40%

10.33% 9.87% 6.15% 22.14% 9.27% 12.57% 29.66% 28.30% 3.64% 9.43% 18.06% 24.90% 24.16% 27.06% 26.46%

7641333 5807535 7451122 9326361 17429807 26159361 43910981 63354055 11557463 10217842 12757173 21593374 42355776 49680700 63781690 5259815 5668281 6939941 8622325 10703102 12302992 13589082

1655389 1224335 43.70% 482899 1341635 39.70% 946288 1463404 41.60% 752433 2235054 43.03% 1577552 3254200 46.91% 3991056 4073818 53.04% 8731106 5459619 52.06% 17217360 8079129 47.50% 4950049 3768934 50.02% 2544473 4661570 40.54% 3019683 5649853 44.31% 7464986 7544020 45.53% 17915641 10944678 44.95% 20561270 11617079 53.90% 25221482 15813905 52.59% 1101410 1284177 1581904 2147876 2696978 2536484 2832052

10.89% 9.02% 10.72% 0.61% 9.71%

5.21% 5.79% 5.71% 6.38% 6.17% 5.31%

23.88% 25.49% 23.84% 25.46% 27.11% 25.60%

1999765 2237640 2820474 2827762 3920492 3037939

30.19% 28.42% 27.23% 25.53% 23.72%

1012090 1181779 1142264 1695503 1948487 2500816 4236183 248038 322060 448549 638247 1069700 1139002 1060808 1825189

15245 5.08% 16989 13.51% 3.97% 6.94% 16376 15.78% -3.38% -6.16% 18661 4.55% 1.06% 2.17% 20899 3.90% -4.20% -10.40% 25321 4.65% 0.52% 1.55% 32779 3.52% -4.14% -15.81% 3781 13.52% 7.59% -29.57% 5628 9.25% 3.40% -20.80% 6378 7.87% 13.58% -347.84% 6088 9.47% 7.74% 128.86% 6931 6.91% 8.54% 74.29% 7219 7.01% 10.54% 61.53% 7895 7.35% 5.33% 21.62% 11715 5.94% 11.80% 38.90%

1607608 1840395 2231263 2757829 3352377 3702034 5540999 244994 321525 455548 722124 1219021 1283543 1499295 2073352

550379 523294 761208 826007 1479585 1570139 2715286 150035 157857 143293 246875 336880 320796 0 378733

864841 1108790 1125003 1312791 1153362 1231842 1185917 -51343 -41334 10991 59709 163351 265486 421053 662626

49.66% 44.88% 49.60% 51.33% 49.31% 43.93% 69.95% 61.07% 66.49% 65.26% 70.34% 64.04% 61.32% 60.94%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

58

Portfolio at risk &gt; 30 days

DSPI Grameen NGO8

16

ECLOF-RP NGO9

17

FAIR Bank Rural Bank9

18

FICO Rural Bank (Coop)10

19

First Macro Bank Rural Bank11

20

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

739305 965993 1758246 3114445 3229053 2910026 2761618 3481469 608282 578690 1188999 1548832 2015365 1863056 2158201 965457 1676166 2759177 5613176 10034892 10894532 9184053 3201421 3884906 5218259 8427408 12361490 13076832 23552982 26967335 5752577 5988199 6651566 7032483 9844506 9439166 9882480 11586584

13487 18544 31686 56626 53799 59057 18708 55691 7860 4611 5560 5865 5418 4451 4996

2.70% 4.13% 4.56% 7.58% 40.10% 53.04% 48.79% 23.50% 16.45% 19.04% 25.72% 15.98% 5.91% 10.19%

7.83% 6.45% 3.11% -3.05% -9.46% 1.46% 3.78% -8.98% -4.33% -0.48% -6.48% 1.46% 1.61%

20.04% 19.02% 11.10% -13.29% -59.13% 13.56% 31.15% -10.73% -5.56% -0.70% -10.08% 2.43% 2.71%

1074078 1332571 2550760 3833113 4145747 3557284 3574200 4275402 959350 930984 1802557 2127279 2833649 2686692 3363937 1135271 2027661 3703748 7052038 12878695 14573572 13327934 5526504 6333311 8743305 12947684 19477702 23814054 34574902 8021154 8471388 9568247 10807943 14636503 13385333 14038190

2113784 2593803 2366975 2292580 2424166 44851 44508 423502 512820 789802 716235 796213

424754 515300 800615 986496 841396 390719 377350 574705 727958 855249 1273301 1436509 1753223 1558910 2039240

42.49% 34.81% 32.38% 37.11% 29.02% 29.51% 35.93% 32.39% 30.46% 27.94%

4232 5.13% 9972 4.05% 14.98% 16129 4.65% 16.11% 28653 2.30% 14.29% 35149 1.42% 6.84% 33093 4.58% 4.12% 21775 17.79% 0.63% 8379 7825 7.17% 8218 5.00% 10195 5.77% 13253 6.96% 19804 0.10% 24085 3.79% 26059 6.49% 6262 0.00% 5402 6879 0.00% 6120 16.01% 7086 0.11% 7268 11.77% 7617 5.41%

99.53% 117.64% 118.16% 56.46% 32.06% 4.28%

3216528 5813965 7438148 6397542 1338673 1565551 2139986 3123167 3886190 3463973 7968684

181295 294626 490273 810432 1605684 46.01% 1924489 45.68% 2185064 35.95% 1100171 1415013 1911756 2594664 3596175 3673095 4816548 801104 879165 914814 1125870 1404511 1283068 1465081

4.78% 5.17% 4.78% 5.20% 4.32% 3.66%

22.55% 23.44% 23.03% 27.22% 25.75% 25.19%

37.89% 34.78% 31.23% 29.62% 30.18% 26.09%

1.51% 1.91% 1.03% 1.00% 0.65% 1.40%

14.79% 19.16% 10.29% 10.03% 6.79% 13.94%

1146507 630751 892215 1024498 1008462

20.77% 20.57% 21.65% 20.32%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

59

Portfolio at risk &gt; 30 days

Green Bank Rural Bank12

21

HSPFI NGO10

22

Kasagana-Ka NGO11

23

Kazama Grameen Grameen NGO12

24

KBank Bank13

25

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

15725666 18319399 18582884 19550081 31430895 33905154 37150928 35918780 420291 423817 747974 1001099 1178826 1710812 325463 464585 589159 1060391 1283848 1489166 2013976 1308139 1611093 2291191 2769615 2524365 2754467 3392526

54700 60095 67193 14.12% 69386 9.38% 72742 9.45% 76161 1.61% 66561 9.39% 53448 13333 13907 11798 12914 14271 18002

1.93% 1.20% 1.89% 1.12% 0.96% -0.01%

14.14% 9.48% 13.54% 7.44% 6.76% -0.08%

21278707 24989470 4780066 29032683 4241535 32778089 4035734 51478235 10892925 53440111 16925127 61864115 20804459

3077580 3240692 3605171 4999213 7703737 7246764 6633236

34.12% 35.10% 36.83% 39.75% 35.66%

-4.92% 2.89% 2.83% 2.91% 1.10% 0.66%

-16.66% 3.55% 2.14%

781993 786235 1247916 1602846 2031318 2857468 357200 581757 742321 1275508 1607042 1724242 2334699 1702077 2038278 2920889 3791089 3367467 4047624 3602366

609816 770479 1018334 1414504 136135 240962 248488 472049 556615 456659 540739 145070 184739 265748 270139 253818 476711 392682

225345 237465 369705 510862 30.99% 605345 41.08% 547187 73291 130768 200132 260590 360456 525270 796826 599372 921485 1318579 1592494 1177566 1222946 1367322

6209 4.50% 8553 17.42% 10.45% 8544 7.04% 8.43% 11099 4.24% 2.05% 15083 2.32% 9.93% 15537 3.67% 9.21% 17800 1.51% 10.02% 15709 19733 21417 21761 21757 26082 27811

48.10% 33.73% 8.97% 46.09% 34.63% 30.77%

68.44% 71.16% 65.60% 72.25% 64.86% 65.16%

4.65% 12.96% 5.63% 8.10% 6.38% 3.41% 6.58% 0.12% 0.72% 0.07% 3.47% 0.67%

31.88% 17.94% 7.87% 0.32% 0.21% 1.98%

48.60% 47.06% 40.84% 47.40% 45.67% 51.50%

1429625 1692649 3643851 4420061 5410927

21926 1.17% 16619 3.38% 24580 6.79% 25967 10.10% 33815 15.17%

2.84% 2.16% 1.85% -5.29%

5.59% 4.92% 4.64% -15.68%

2318242 4437022 6331869 6506389 10666320

0 0 96899 620939 662787

1391201 2033982 2699054 2424315 3366182

74.51% 62.42% 53.15% 64.82%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

60

Portfolio at risk &gt; 30 days

KCCDFI NGO13

26

KMBI NGO14

27

Life Bank Found NGO15

28

Mallig Plains RB Rural Bank14

29

MILAMDEC NGO16

30

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

942979 1101598 2075667 2413618 2286411 3380169 1612326 4130129 5124529 5675951 9107964 8138079 11269717 14724279 208937 885257 1705822 4718656 11524652 19316234 19829145

10964 12269 26.56% 0.39% 21744 5.12% 4.09% 23493 6.26% 11.33% 18750 1.49% 2.33% 24299 3.91% 3.24% 27266 0.89% 4.98% 80078 0.20% 5.87% 82076 1.13% 20.60% 83167 2.17% 15.22% 117721 1.77% 10.81% 123913 2.52% 3.82% 186170 5.86% 2.72% 235482 7.42% 6.13% 4208 0.00% 15252 0.02% 14.79% 25852 0.52% 22.93% 61524 0.16% 20.88% 130667 0.10% 17.27% 207545 0.38% 22.37% 236917

1.41% 39.92% 79.87% 13.11% 19.95% 9.79% 18.11% 56.61% 31.29% 21.05% 7.36% 5.25% 12.96% 121.87% 99.94% 82.94% 68.39% 73.99%

1044006 1093581 2415257 2463744 3230925 4606130 2838899 5294020 7619369 9228118 15043015 13109684 15386828 19467095 232628 996071 1938919 5367923 13189185 18696382

196231 449627 1072540 850451 1289897 2011393 592034 1817115 1243544 460910 1461258 210615 0 802384

624343 1693730 4479799 4543795

460210 127869 231919 460224 553573 721174 1173905 1460295 3239764 4957337 7511710 7093059 7686618 8795670 -8801 157926 515509 1323694 3361209 6280812

56.29% 51.14% 72.38% 63.02% 60.65% 70.29% 68.84% 81.91% 75.52% 75.18% 73.46% 70.74% 82.78%

77.17% 59.49% 61.04%

4997037 5752987 6540970 7986435 7320455 6917881 7990893 449461 573123 727447 1804375 1993963 2835236

21806 23634 25112 25016 25079 23600 22665

12.75% 12.34% 11.30% 1.80% 11.27% 10.51%

-0.14% -0.24% 0.47% 1.33% 1.70% 0.68%

-0.97% -1.67% 3.04% 8.18% 9.78% 3.66%

6131785 7043254 8024071 10356022 9190644 9580865 11488553 695300 1090170 1310106 2540942 2938979

1766724 2229777 3000821 3295433 2617886 2455525 2926187 87996 419179 504003 1275774 1555444

888163 1003369 1170939 1653335 1535139 1731618 2189748

25.94% 24.63% 25.60% 19.37% 28.70% 20.84%

9525 17.24% 13024 10.53% 16652 7.06% 20462 29836 2.95%

-1.31% 0.70% 1.47%

-4.15% 2.70% 9.01%

271758 293095 64.55% 326623 65.64% 422775 473256 46.74%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

61

Portfolio at risk &gt; 30 days

RBVictorias Rural Bank15

31

NWTF Grameen NGO17

32

OK Bank Bank16

33

PALFSI NGO18

34

PBC Rural Bank17

35

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009 2010

1436493 1180958 1146156 1472259 1905064 1993652 1987736 3617209 5173535 6480759 7865485 10682187 9369720 8957004 11069786 2011270 1267295 2840159 3216038 1964514 1464420 5410927 5816718 1342560 1350671 2762526 3992790 3475960 2710940 2429124 2832197 4502722 6741964 11353327 13224748 15474947 20799370

1946 2610 3796 4160 4119 3845 2529 48152 54863 67982 66530 76203 84958 78025 85808 27191 27740 29516 26585 15566 12628 33815 30793

11.71% 14.36% 18.85% 17.26% 7.84% 2.08% 17.29% 11.81% 8.11% 8.35% 4.62% 3.32% 3.24% 3.86% 9.69% 7.33% 1.46% 44.25% 17.37% 36.43% 9.37%

6.54% 4.18% 1.98% 1.89% 1.94% 2.57% 1.99% 1.17% 0.82% 0.83% 0.47% 0.39% 2.51% 2.08% 1.94% 1.01% 0.22% -4.54% -15.95% -4.45% -5.81% -6.18% -3.34%

35.39% 19.04% 9.06% 8.93% 8.88% 12.67% 9.58% 4.94% 3.97% 4.95% 3.07% 2.56% 16.07% 9.46% 6.97% 2.07% 0.49% -10.45% -37.19% -10.87% -15.15% -18.58% -11.49%

2018454 2101634 2439224 2727546 3042761 2924964 3242052 6592372 8202791 10490478 11481726 15090696 14283245 14578221 16625587 3547575 3411703 5112884 4358439 5270681 4020168 10666320 11084502

151067 67738 72762 218227 120611 471501 346604 2924152 4120563 5696210 5402974 6083601 4057128 2735532 1604963 1057017 1063302 1188382 964345 728856 252738 662787 1578994

401947 501767 492857 602636 659282 552919 728431 1499469 1564696 1579198 1803312 2272188 2320762 4027798 4669690 1543734 1539528 2163069 1898992 2041089 1521988 3366182 2965179 394419 525142 585323 -227044 -225701 -167178 608354 697350 1013501 1337210 1848491 1828824 2383046 3568261

35.36% 42.14% 42.78% 46.16% 40.05% 39.61% 38.87% 50.92% 48.35% 48.27% 46.41% 38.20% 44.01% 37.09% 40.66% 72.92% 64.74% 45.33% 30.86% 37.25% 55.38% 92.68% 64.00%

10959 0.00% 11750 3.75% 4.70% 19.46% 18210 4.08% 0.49% 2.47% 22113 44.53% -25.85% -553.36% 20887 46.01% -16.95% 265.66% 21706 44.25% 2.21% -33.86% 27011 28288 0.68% 0.82% 4.47% 25541 0.42% 1.11% 6.05% 0.39% 6.85% 42.34% 0.00% 2.17% 15.49% 46931 4.77% 1.97% 15.29% 61776 2.51% 1.80% 14.10% 49671 8.84% 2.72% 19.19%

1693484 698087 2110874 795411 3508130 1774917 4162358 2608231 2932995 2014243 3097514 3264692 3308506 3819070 5529990 9006976 13719242 6756601 14817502 7316095 18187260 8271943 23848059 10830560

44.15% 35.16% 34.07% 23.04% 24.67%

28.98% 29.60% 28.14% 27.50%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

62

Portfolio at risk &gt; 30 days

RBDigos Rural Bank18

36

RBMabitac Rural Bank19

37

RBMontevista Rural Bank20

38

RBOroquieta Rural Bank21

39

RBSolano Rural Bank22

40

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

1879058 2426766 3238817 4086534 6453846 7372276 7111276

4918 5835 5464 6840 7099 8873 7921

6.67% 7.21% 5.56% 0.02% 8.45%

2.77% 1.69% 2.46% 3.27% 2.09% 2.09%

20.01% 13.51% 20.69% 26.75% 16.51% 15.24%

3109567 3881916 4972871 6495968 9600440 9953537 10233406

338680 706782 763925 1492212 1909984 1472716

468919 497060 611065 754430 1214649 1256202 1508933

26.17% 25.69% 23.17% 23.46% 22.17%

2085936 2594952 2694881 4508464 4674894 4516735 6030100 1780476 2294331 2730155 3640395 5808649 5329571 4694478

3699 5764 5757 5723 12500 14035 12038 6545 10665 10209 12461 26699 20496

33.61% 11.63% 10.95% 6.59% 1.21% 11.19% 0.31% 0.39% 0.28% 0.79% 0.00% 0.80% 0.92%

2.02% 0.79% 0.93% 1.75% 1.22%

17.14% 6.37% 7.79% 14.85% 9.68%

3418294 3874032 4834485 7264188 7440735 8446430 2773408 3226832 3891049 5082654 7783187 7260199 7768185

476181 555499 704783 1371027 1354074 1223087

380830 478759 605743 836147 897853 1113000

24.22% 28.07% 24.89% 29.66% 34.02%

-0.32% 0.32% 0.37% 0.34% 0.33% 0.84%

-2.79% 3.30% 4.41% 3.93% 3.54% 7.56%

1891482 1657113 1513054

321514 365985 328949 426770 679778 28.10% 708798 30.46% 968873 29.83%

2093838 3103644 4466365 5764922 5785325 5300642 2953543 2840177 2951550 2451308 2554905 2445832 2859520

1573 2912 12.54% 3602 8.99% 3733 8.73% 4637 0.08% 4708 5.72% 5684 5567 5448 5136 4982 5113 5146

-0.33% 1.17% 1.20% 1.47% 1.45%

-2.59% 11.06% 11.62% 14.01% 12.40%

2743080 4099493 5818467 8285009 7607834 8080583 3595792 4073376 4433748 4992344 6378195 5245891 5530873

473411 561108 624890 775783 984001 1182234

433822 449009 601247 848708 823165 1012878 594603 828163 1062889 1413669 1765522 1652548 1833716

19.47% 18.79% 17.11% 18.51% 19.50%

20.33% 20.54% 19.34% 0.91% 13.80%

5.47% 5.03% 5.29% 2.31% 2.92% 0.58%

29.50% 22.61% 20.12% 8.27% 9.94% 1.79%

114551 131000 43992 0 0 0

21.77% 23.09% 21.41% 21.84% 20.45%

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

63

Portfolio at risk &gt; 30 days

RBTalisayan Rural Bank23

41

RSPI NGO19

42

Serviamus NGO20

43

TSKI NGO21

44

TSPI NGO22

45

ValiantRB Rural Bank24

46

2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010

1810734 1984017 2466445 2975917 3939233 4061902 3917011

9994 10508 11970 13843 15029 17992 18599

15.62% 17.11% 15.46% 16.96% 0.44% 11.87%

1.84% 0.67% 0.88% 1.29% 2.15% 2.00%

13.00% 4.85% 6.51% 9.38% 15.14% 12.38%

2615735 2801764 3379614 4007927 5454171 5697976 6218975

828351 737527 739026 800076 759348 651728 507510

358947 409061 449124 549641 751705 830071 1096794

37.71% 37.43% 36.22% 35.37% 42.23% 37.91%

436758 705902 1021244 1594953 1873405 1972227 2818120 945252 747599 704669 916455 826492 937758 1178239 4147882 7357389 11376005 14706394 20935683 25990020 21008414 23594156 6194932 9023724 10654793 14227076 18457373 23061900 30198615 34338508 2555307 3022946 3980173 5733256 8814794 12157293 16022892

6469 10822 14819 18293 21534 21564 33771 8768 7421 7389 8868 9439 9993 10563 81005 122832 162867 173002 168661 172857 161299 194660 77868 109629 113137 125980 136705 199087 264089 282920

7.91% 7.91%

5.12% 8.84% 8.74% 9.23% 8.81% 7.86% 2.22% 13.27% 2.12%

29.08% 48.40% 45.59% 33.11% 43.16%

651821 999237 1538642 2441095 2453326 2901242

633633 915881 960548 842169

107807 183082 280425 525109 636772 1009924

73.04% 70.22% 68.81% 72.25%

14.91% 2.00% 19.10% 14.49% 12.34% 3.46% 1.65% 3.59% 6.26% 6.13% 3.67% 5.66% 6.00% 1.58% 1.04% 2.13% 1.35% 1.28% 1.96% 1.51% 5.57%

11.27% 6.80% 1.89% 3.39% 5.57% 9.99% 0.07% 1.50% 6.61% 3.68% 1.83% 1.50% 2.17% 1.02% 7.75% 7.12% 5.66% 3.80% 4.92% 0.98% 0.73% 5.74% 1.22% 1.17% 1.60% 0.88% 0.77% 0.25%

30.47% 14.20% 3.66% 6.84% 11.43% 20.78% 0.47% 16.74% 67.92% 32.61% 14.00% 12.56% 16.79% 7.00% 19.36% 18.51% 15.61% 10.40% 11.43% 2.32% 2.22% 17.64% 11.82% 13.19% 19.41% 10.74% 8.11% 2.29%

3262 3814 9.50% 5222 7.75% 7000 9.66% 12475 1.56% 16959 16.38%

1168671 1284301 1289202 1695004 1656272 1795065 2086220 8482522 14982755 20066176 29305946 38531536 40397881 39316900 44997868 9047400 12176616 16086647 20758447 25732423 27172582 38096138 51740687 4407948 5739556 8476438 15340295 24151463 24445260 32666831

234218 31282 13456 0 0 0 2894536 5267363 9684344 12218368 18032472 20046923 20345301 23304860 785961 1411639 933416 1343317 1968286 5109112 10661890 9155338 109687 177469 679820 1165993 60416 1166745

359729 547484 685518 857043 804316 878371 986738 948397 1150598 2258590 3311450 5534372 3915744 6380355 5860873 3615876 4548750 5694090 7783530 12213839 10153046 11249674 17970773 499172 545081 715410 1250333 1967434 2660251 3529922

54.13% 52.89% 51.39% 48.76% 50.59% 48.58% 59.61% 64.74% 67.82% 61.30% 50.92% 49.67% 61.37% 55.90% 57.76% 62.71% 56.98% 58.71% 51.11% 50.98% 52.99%

13.00% 16.77% 16.59% 18.40% 17.62%

Source: MIX Market Information Portal for the Philippines (http://www.mixmarket.org/mfi/country/Philippines ) 64

Yield on gross portfolio (nominal)

Gross loan portfolio

Number of active borrowers

Return on equity

Total borrowings

Return on assets

Total equity

Total assets

Year

MFI

Appendix 3. Description of Firms


MFI Name Current Legal Status Address Main Funding Sources

1 1st Valley Bank

Rural Bank

Lanao del Norte

Loans, Voluntary Savings, Insurance, Fund Transfer Services

2 ABS-CBN Bayan Foundation, Inc. 3 ASA 4 Ahon Sa Hirap, Inc. (ASHI) 5 Alalay Sa Kaunlaran, Inc. (ASKI) 6 Bangko Santiago de Libon 7 Bangko Kabayan 8 Bangko Mabuhay 9 Bukidnon Cooperative Bank (BCB) 10 Cantilan Bank, Inc.

NGO NGO NGO NGO Rural Bank Rural Bank Rural Bank Rural Bank Rural Bank

EDSA, Quezon City Ortigas Center, Pasig City Cubao, Quezon City Cabanatuan, Nueva Ecija Libon, Albay Ibaan, Batangas Tanza, Cavite Malaybalay City, Bukidnon Cantilan, Sugao del Sur, Surigao del Sur Grants and Loans Loans, Savings, Shareholder Capital Loans, Savings, Shareholder Capital Savings, Shareholder Capital Loans, Savings, Shareholder Capital Loans, Savings, Shareholder Capital Loans and Savings

11

Center for Agricultural and Rural Development (CARD) Bank

Rural Bank

San Pablo City, Laguna

Loans, Savings, Shareholder Capital

12 13

Center for Agricultural and Rural Development, Inc (CARD NGO) Cooperative Bank of Misamis Oriental, Inc. (CBMO) Community Ecoonomic Ventures, Inc. (CEVI) Cebu Micro-Enterprise Development Foundation Inc. (CMEDFI)

NGO Rural Bank

San Pablo City, Laguna Cagayan de Oro City, Misamis Oriental Tagbilaran City, Bohol

Grants, Loans, Savings Loans, Savings, Shareholder Capital Grants, Loans Grants, Loans, Savings, Shareholder Capital Grants, Loans

14

NGO

15

NGO Grameen NGO

Cebu City, Cebu Balanga City, Bataan

16 Daan Sa Pagunlad, Inc. (DSPI)

65

MFI Name Ecumenical Church Loan Fund (ECLOF Philippines Foundation, Inc.) First Agro-Industrial Rural Bank (FAIR Bank) First Isabela Cooperative Bank (FICO) First Macro Bank (Rural Bank of Pateros) Rural Green Bank of Caraga, Inc. (Green Bank) Hagdanan Sa Pag-uswag Foundation Inc. (HSPFI) Kasagana-Ka Development Foundation, Inc.

Current Legal Status NGO Rural Bank Cooperative Rural Bank

Address

Main Funding Sources

17 18 19

EDSA, Quezon City Gairan, Cebu Cauayan City, Isabela

Loans Loans, Savings, Shareholder Capital Loans, Savings, Shareholder Capital Loans, Savings, Shareholder Capital Loans, Savings, Shareholder Capital Grants, Loans Grants, Loans

20

Rural Bank

Pateros, Manila

21 22 23

Rural Bank NGO NGO

Butuan City, Agusan del Norte Cagayan de Oro City, Misamis Oriental Commonwealth Avenue, Quezon City

24 Kazama Grameen, Inc.

Grameen NGO

Subic, Zambales

Grants, Loans

25 Kausawagan Bank (KBank) 26 27 Kasanyangan-Mindanao Foundation, Inc. (KCCDFI) Kabalikat para sa Maunlad na Buhay, Inc. (KMBI)

Bank NGO NGO NGO Rural Bank

Jaro, Iloilo City Veterans Avenue, Zamboanga City Karuhatan, Valenzuela City Barbara, Iloilo City Mallig, Isabela

Savings, Shareholder Capital Grants, Loans Grants, Loans, Shareholder Capital Savings

28 Life Bank Foundation, Inc. 29 Mallig Plains Rural Bank (Isabela), Inc.

30 MILAMDEC Foundation Inc.

NGO

Carmen, Cagayan de Oro City

31 New Rural Bank of Victorias

Rural Bank

Bacolod City, Negros Occidental Verbena Street, Bacolod City

Loans, Savings, Shareholder Capital

32

Negros Women for Tomorrow Foundation, Inc. (NWTF)

Grameen Bank

Grants, Loans, Savings

66

MFI Name Opportunity Kauswagan Bank (OK Bank)

Current Legal Status Bank

Address Circumferential Road, Antipolo City Bibincahan, Sorsogon City

Main Funding Sources Loans, Savings, Shareholder Capital Grants, Loans

33

People's Alternative Livelihood 34 Foundation of Sorsogon, Inc. (PALFSI) People's Bank of Caraga (Rural Bank of Talacogon - PBC)

NGO

35

Rural Bank

San Francisco, Agusan del Sur Digos City, Davao del Sur Mabitac, Laguna Compostela Valley, Davao del Norte Oroquieta City, Misamis Occidental Solano, Nueva Vizcaya Poblacion Talisayan, Misamis Oriental Magsaysay Avenue, Baguio City Iligan City, Lanao del Norte

Loans, Savings, Shareholder Capital Loans, Savings, Shareholder Capital Loans, Savings, Shareholder Capital

36 Rural Bank of Digos Inc. (RB Digos) 37 Rural Bank of Mabitac Inc. (RB Mabitac)

Rural Bank Rural Bank Rural Bank Rural Bank Rural Bank Rural Bank NGO NGO

38 Rural Bank of Montevista 39 Rural Bank of Oroquieta 40 Rural Bank of Solano 41 Rural Bank of Talisayan - Misamis Oriental Inc.

Loans, Savings, Shareholder Capital Savings, Shareholder Capital

42 Rangtay Sa Pagrangay Inc. (RSPI) 43 Serviamus Foundation

Loans Loans, Savings

44 Taytay Sa Kauswagan Inc. (TSKI)

NGO

Iloilo City

Grants, Loans, Savings

45 Tulay Sa Pag-Unlad, Inc. (TSPI) 46 Valiant Rural Bank (Iloilo City) Inc.

NGO Rural Bank

Guadalupe Nuevo, Makati City Iloilo City

Grants, Loans Loans, Savings, Shareholder Capital

Source: MIX Market Information Portal for the Philippines (http://www.mixmarket.org/mfi/country/Philippines )

67

MFI Name

Products and Services

% of Operations Comprised by Micro Firms

Date Established

Looking for (Investment Types) Loans in Local Currency, Capacity-Building Grants, Equity Investments

1 1st Valley Bank

Loans, Voluntary Savings, Insurance, Fund Transfer Services

0-10

1-Jan-56

2 ABS-CBN Bayan Foundation, Inc. 3 ASA 4 Ahon Sa Hirap, Inc. (ASHI) 5 Alalay Sa Kaunlaran, Inc. (ASKI) 6 Bangko Santiago de Libon 7 Bangko Kabayan 8 Bangko Mabuhay 9 Bukidnon Cooperative Bank (BCB) 10 Cantilan Bank, Inc.

Loans Loans, Voluntary Savings, Insurance Loans, Insurance Loans, Training and Consulting Loans, Full-Scale Financial Services Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings, Insurance, Training and Consulting, Full-Scale Financial Services

91-100 91-100 91-100 91-100 21-30 11-20 0-10 11-20 11-20

1-Jan-97 9-Jul-04 24-Jul-91 1-Jan-87 1-Jan-73 15-Aug-57 1-Jan-72 1-Jan-77 1-Jan-80 Loans in Local Currency Loans in Local Currency

11

Center for Agricultural and Rural Development (CARD) Bank

91-100

1-Jan-86

12 13

Center for Agricultural and Rural Development, Inc (CARD NGO) Cooperative Bank of Misamis Oriental, Inc. (CBMO) Community Ecoonomic Ventures, Inc. (CEVI) Cebu Micro-Enterprise Development Foundation Inc. (CMEDFI)

Loans, Training and Consulting Loans, Full-Scale Financial Services Loans, Insurance, Training and Consulting, Full-Scale Financial Services Loans, Voluntary Savings, Insurance Loans, Voluntary Savings

91-100 11-20

1-Jan-86 1-Jan-79 Loans in Local Currency

14

91-100

17-Aug-00

15

91-100 91-100

1-Jan-98 1-Jan-94

Capacity-Building Grants

16 Daan Sa Pagunlad, Inc. (DSPI)

68

MFI Name Ecumenical Church Loan Fund (ECLOF Philippines Foundation, Inc.) First Agro-Industrial Rural Bank (FAIR Bank) First Isabela Cooperative Bank (FICO) First Macro Bank (Rural Bank of Pateros) Rural Green Bank of Caraga, Inc. (Green Bank) Hagdanan Sa Pag-uswag Foundation Inc. (HSPFI) Kasagana-Ka Development Foundation, Inc.

Products and Services

% of Operations Comprised by Micro Firms 91-100

Date Established 1-Jan-01 16-Jan-99 1-Jan-80

Looking for (Investment Types)

17 18 19

Loans, Voluntary Savings, Fund Transfer Services Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings, Insurance, Full-Scale Financial Services

41-50 0-10

Loans in Local Currency Capacity-Building Grants

20

21-30

19-Aug-60

21 22 23

Loans, Full-Scale Financial Services Loans, Training and Consulting Loans, Training and Consulting

91-100 91-100 91-100

1-Jan-75 1-Jan-87 1-Jan-03 Donations, Capacity Building Grants Loans in Local Currency, Loans in USD, CapacityBuilding Grants, Donations, Loans in EUR

24 Kazama Grameen, Inc.

Loans, Voluntary Savings

91-100

7-May-01

25 Kausawagan Bank (KBank) 26 27 Kasanyangan-Mindanao Foundation, Inc. (KCCDFI) Kabalikat para sa Maunlad na Buhay, Inc. (KMBI)

Loans, Voluntary Savings, Full-Scale Financial Services Loans, Insurance Loans Loans, Voluntary Savings, Insurance Loans, Voluntary Savings, Training and Consulting, Full-Scale Financial Services Loans, Voluntary Savings, Training and Consulting

91-100 91-100 91-100 91-100 21-30

1-Jan-05 1-Jan-02 1-Jan-86 1-Jan-03 1-Jan-69 Loans in Local Currency, Loans in USD, CapacityBuilding Grants, Donations, Loans in EUR

28 Life Bank Foundation, Inc. 29 Mallig Plains Rural Bank (Isabela), Inc.

30 MILAMDEC Foundation Inc.

91-100

1-Mar-92

31 New Rural Bank of Victorias

Loans, Voluntary Savings, Fund Transfer Services, Full-Scale Financial Services Loans, Lending and Deposit Vehicles

21-30

1-Jan-61

32

Negros Women for Tomorrow Foundation, Inc. (NWTF)

91-100

1-Jan-84

Guarantees

69

MFI Name Opportunity Kauswagan Bank (OK Bank)

Products and Services

% of Operations Comprised by Micro Firms 91-100

Date Established 1-Jan-01

Looking for (Investment Types)

33

Loans, Voluntary Savings

People's Alternative Livelihood 34 Foundation of Sorsogon, Inc. (PALFSI) People's Bank of Caraga (Rural 35 Bank of Talacogon - PBC)

Loans, Insurance Loans, Voluntary Savings, Training and Consulting, Full-Scale Financial Services, Business Devlopment Services, Health, Education Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings, Full-Scale Financial Services Full-Scale Financial Services, Education Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings, Full-Scale Financial Services Loans, Voluntary Savings Loans, Insurance, Busines Development Services Loans Loans, Insurance, Training and Consulting, Business Development Services Loans, Insurance, Training and Consulting Loans, Voluntary Savings, Full-Scale Financial Services

91-100

1-Jan-97

Loans in Local Currency

41-50

24-Oct-72

Capacity-Building Grants

36 Rural Bank of Digos Inc. (RB Digos) 37 Rural Bank of Mabitac Inc. (RB Mabitac)

0-10 11-20 0-10 0-10 0-10 91-100 91-100 91-100

17-Dec-55 1-Jan-74 31-Mar-77 1-Dec-66 1-Jan-70 1-Jan-86 1-Jan-87 1-Jan-97

Loans in Local Currency Loans in Local Currency Capacity-Building Grants

38 Rural Bank of Montevista 39 Rural Bank of Oroquieta 40 Rural Bank of Solano 41 Rural Bank of Talisayan - Misamis Oriental Inc.

Loans in Local Currency

42 Rangtay Sa Pagrangay Inc. (RSPI) 43 Serviamus Foundation

Loans in Local Currency, Capacity-Building Grants

44 Taytay Sa Kauswagan Inc. (TSKI)

91-100

1-Jan-86

Loans in Local Currency, Donations, Guarantees, Capacity Building Grants Loans in Local Currency, Capacity Building Grants Loans in Local Currency

45 Tulay Sa Pag-Unlad, Inc. (TSPI) 46 Valiant Rural Bank (Iloilo City) Inc.

91-100 11-20

1-Jan-81 1-Jan-97

Source: MIX Market Information Portal for the Philippines (http://www.mixmarket.org/mfi/country/Philippines )

70

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