The financial rating provides an expert opinion on the medium-term viability and creditworthiness of a financial service provider through a comprehensive assessment of risks and performance. The financial rating can be easily combined with the social rating to provide an opinion on a financial service provider’s double bottom line performance.
The financial rating is an effective management and reporting tool. It is used to:
The FR provides a comprehensive assessment of risks and performance through a dynamic qualitative and quantitative analysis of the following areas:
Social Rating integrates the Universal Standards of Social Performance Management (USSPM) and provides an external validation of the MFI implementation of the USSPM.
Social Rating reviews Client Protection and gives an indicator of the efforts required to achieve Client Protection Certification, helping to get ready for it.
The Social Rating provides an opinion on the capacity of an MFI to put its mission into practice and achieve social goals. Beneficiaries may choose between a Comprehensive (with focus group and client survey) or Standard Rating (MFI-level information).
Our social rating methodology includes the following areas of analysis:
The social rating comprehensive allows to base the analysis on highly qualitative and reliable information,
directly collected by the MFI from the clients during the rating process. Following the process indicated and supervised by the rating agency, the MFI also learns how to raise and report such information according to best international practices of social performance management.
The social rating standard bases the analysis on information already available at the MFI.
The Credit Rating is typically offered in countries where the financial regulation and supervision system is well developed and where the majority of MFIs are regulated institutions (i.e. Ecuador, Peru, Bolivia, Pakistan, India, etc.). The credit rating is normally a mandatory exercise required by the supervising authority to all the regulated financial institutions. It provides an opinion on the short-run solvency and long-run institutional sustainability through a comprehensive assessment of risk, performance and market position.
The Credit Rating methodology includes a dynamic quantitative and qualitative analysis of the risk factors, strengths and opportunities of the financial institution, with the goal of giving an opinion on the risk profile of the institution (credit, liquidity, market, operational, governance and reputation risk are assessed)
The Assessment provides a detailed analysis of the operations, internal policies and procedures compared to international best practices. The specific aim is to assess the level of development of the MFI and to identify the main internal weaknesses and areas of improvements, paying particular attention to the organizational and operating features.
The Assessment methodology includes a process-focused analysis which entails the identification of risk related to organization/policy's gaps. The whole analysis is done taking into account the overall maturity level and risk exposure of the institution, as well as the maturity and exposure of each area of diagnosis. The main features of the methodology are:
Client Protection Certification is an independent, third party evaluation to publicly recognize financial institutions that meet adequate standards of care to implement all of the Client Protection Principles throughout its operations, product offerings and treatment of clients.
To be certified, a financial institution needs to comply with all the Certification standards derived from the seven client protection principles:
The Country Study provides an in-depth analysis of a given country’s main legal and fiscal frameworks relevant to the local microfinance sector and identifies the most promising FSPs.
The study offers a detailed overview of the inclusive finance sector, contextualizing it within the political and socio-economic environment of the country. It is useful for investors, donors and other stakeholders that need to:
MicroFinanza Rating realizes full Country Study or Sector Mapping, the latter shall only provide with a screening of the most promising FIs and/or FIs that might represent a good fit for investment and/or technical assistance.
Upon request, MicroFinanza Rating provides customized country studies tailored to the specific needs of stakeholders. Click here to request a quote.
MIMOSA consists of four main components:
Its guiding rules are: keep it simple without being simplistic, rely on data that are meaningful and accessible in most markets, and keep the output both understandable and actionable. If we can’t explain it, we don’t use it.
The country reports provide a host of supplemental data and context to help evaluate the MIMOSA score.