How is an MFI rating or assessment useful to an investor?
MFI ratings and assessments help investors decide where to put their money. Different types of ratings and assessments – credit risk ratings, global risk assessments, mini assessments, and social ratings – serve different purposes. A credit risk rating quantifies the statistical probability that the MFI will be able to meet its debt servicing obligations. A global risk assessment provides a broader assessment of an MFI’s operations and prospects. A mini assessment is a rating of a young MFI that is too small, or too young, for a full-scale credit risk rating or global risk assessment. A social rating is a rating of the social performance of a microfinance institution, which investors can use to compare institutions so that they can direct their funds to help achieve specific social, ethical and/or financial goals. Investors use these reports, in varying degrees, as part of their due diligence process, which provides a picture of an MFI’s profitability potential. Details such as an MFI’
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