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The Microfinance Contagion Scenario

Harvard Business Review

But as information trickles out about how bad the repayment situation in AP is, a plausible global contagion scenario is emerging. Losses in AP will overwhelm many institutions' equity cushion. The average debt-to-equity ratio of the 10 largest MFIs in India is 7.06 , indicating an average 12% equity cushion.

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End the Religion of ROE

Harvard Business Review

He reasoned that if marketers worked on maximizing return on sales, production managers were rewarded for the sales they squeezed out of their physical plant, and finance managers focused on minimizing the amount of equity capital they needed, ROE would take care of itself. Then banking regulations were imposed.

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