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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. In other words, at current repayments rates, any MFI with more than 12% of its portfolio in AP is at risk of insolvency. In a recent paper, Jonathan Morduch and Jonathan Conning explain the role of debt and equity financing in the microfinance industry.