Promoting Inclusive Markets and Financial Systems
This document summarizes the 2010 Microfinance Financial Reporting Standards, updated from their original publication in the document Measuring Performance of Microfinance Institutions, A Framework for Reporting, Analysis and Monitoring (March 2005). The document outlines the microfinance financial reporting standard ratios, which have been updated for relevancy in today's microfinance industry.
The Microfinance Financial Reporting Standards (the MFRS) uses a financially conservative and prudent approach to measuring financial performance, due to the fact that many MFIs are exposed to volatility in their operating environments (natural, political, economic, or a combination). Specific implications of this financially conservative approach are reflected in
New ratios reflect the microfinance industry’s growing attention to measuring and analyzing risk. Finally, a more robust set of financial performance standards have been added to account for the growing number of MFIs that are regulated, capture deposits, and have complex capital structures.
One of the primary goals of the MFRS is to ensure that microfinance financial performance ratios are calculated in a consistent manner. MFIs, microfinance associations and networks, regulators, donors, lenders, investors, raters, researchers, and others are all encouraged to use them. Please note that these standards only address microfinance financial performance. Standards beyond the scope of this publication address other aspects of microfinance, such as social performance and impact
investing, among others.