MIX's Presentation "Balancing the Double Bottom Line" from the 2014 Microcredit Summit Campaign.

1. Microfinance Information Exchange
Balancing the Double Bottom Line
Synergies and Trade-offs Between Performance Types
17th Microcredit Summit Mérida, Mexico September 5, 2014
The Premier Source for Microfinance
Data and Analysis
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

2. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
2
Goals of MIX’s study
 Test industry consensus about the value of social
performance management (SPM) and its interaction
with financial performance
 Continue to build business case for robust SPM
 Explore MIX’s combined data set and identify areas for
deeper analysis
 Follow up to a 2010 MIX study* (“Synergies and Trade-offs”)
because MIX’s SP dataset has grown significantly
* Based on 2008 data

3. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
3
MIX/SPTF SP indicator categories
INDICATOR CATEGORY WHAT THE INDICATORS MEASURE
Mission and social goals
The MFI’s stated commitment to its social mission, its
target market, and development objectives
Governance
The board of directors’ (BoD) level of engagement with
SPM
Range of products and services
Financial and nonfinancial products and services
offered by the MFI
Client outreach by lending methodology Number of active borrowers by lending methodology
Borrower retention The MFI’s borrower retention rate
Social responsibility to clients
MFI implementation of the Smart Campaign Client
Protection Principles
Transparency of costs of services to clients How the MFI states its lending interest rate(s)
Human resources and staff incentives
The MFI's policies regarding social responsibility to staff,
staff gender composition, staff turnover rate, and staff
incentives linked to social performance goals
Employment creation and enterprises financed Business development and job creation outcomes
Social responsibility to the environment
MFI policies and initiatives in place to promote
environmentally friendly practices and mitigate
environmental impacts of financed enterprises
Poverty outreach Client poverty level outcomes

4. 100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
4
Current goals versus outcome reporting
0%
Poverty
reduction*
Existing business
growth
Employment
generation
Gender equality
and women's
empowerment*
Start-up
development
Percent of MFIs citing goal Percent of MFIs citing goal and reporting outcomes
* Proxy outcome indicators
Outcome data is FY12 except poverty data which is FY10–12; n = 965

5. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
5
Study methodology
 Overall sample of 974 MFIs but no. of obs. varies by
indicator
 Quantitative data mostly FY11 but occasionally
supplemented with prior years where no. of obs.
was too small (e.g. client poverty data)
 Quantitative data from FY12 was also used in a very
small number of instances
 13 social performance and 12 financial performance
variables were analyzed
 Various correlation methods used due to
heterogeneity of data and type of relationship
observed

6. 3% 3%
10%
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
6
MFI sample characteristics
37%
33%
17%
7%
NGO
NBFI
Credit Union /
Cooperative
Bank
Rural Bank
Other
29%
19%
20%
19%
3%
Latin America and
The Caribbean
Eastern Europe and
Central Asia
South Asia
Africa
East Asia and the
Pacific
Middle East and
North Africa
MFI SAMPLE BY LEGAL STATUS
• Mostly NGOs and NBFIs (70%)
• Banks and rural banks make up
around 10% total
MFI SAMPLE BY REGION
• LAC slightly overrepresented
• EAP slightly underrepresented
• MENA very underrepresented

7. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
7
Select findings: staff incentives
Research question:
Is there a correlation between the existence of specific HR staff
incentives and other process or performance indicators?
Hypothesis:
MFIs with staff incentives tied to specific performance areas will
show better performance in these areas relative to MFIs without
such incentives

8. ?
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
8
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
Portfolio
quality
(PAR30 and
PAR90)
Efficiency
(operating
cost as % of
portfolio)
Synergy Trade-off Inconclusive

9. Hypothesis:
MFIs with staff incentives tied to specific performance areas will
show better performance in these areas relative to MFIs without
such incentives
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
9
Select findings: staff incentives
Research question:
Is there a correlation between the existence of specific HR staff
incentives and other process or performance indicators?
Synergies:
• Portfolio quality incentives
correlated with lower PAR30
(average 3.2% lower)
• Client retention incentives
correlated with better client
retention (average 4.3% higher)
Trade-offs:
• Growth incentives (“attract new
clients from target market”)
correlated with fewer borrowers
per loan officer (average 66 fewer
borrowers per loan officer)

10. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
10
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+
Efficiency
(operating
cost as % of
portfolio)
Synergy Trade-off Inconclusive

11. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
11
Select findings: staff turnover
Research question:
Is staff turnover correlated with efficiency indicators?
Hypothesis:
MFIs with higher rates of staff turnover will show higher operating
expense ratios and lower borrower retention (previous MIX
finding)

12. ?
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
12
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+
Efficiency
(operating
cost as % of
portfolio)
Synergy Trade-off Inconclusive

13. Hypothesis:
MFIs with higher rates of staff turnover will show higher operating
expense ratios and lower borrower retention (previous MIX
finding)
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
13
Select findings: staff turnover
Research question:
Is staff turnover correlated with efficiency indicators?
Synergies:
• Staff turnover negatively
correlated with borrower
retention
• Staff turnover positively
correlated with PAR30 and PAR90
Trade-offs:
• Staff turnover negatively
correlated with average staff
salary

14. * Staff turnover rate is negatively correlated with average salary.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
14
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+ +
Efficiency
(operating
cost as % of
portfolio)
-*
Synergy Trade-off Inconclusive

15. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
15
Select findings: borrower retention
Research question:
Is borrower retention correlated with efficiency or risk indicators?
Hypothesis:
MFIs with higher borrower retention will have lower risk profiles
and have lower rates of staff turnover (previous MIX finding)

16. ?
* Staff turnover rate is negatively correlated with average salary.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
16
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+ +
Efficiency
(operating
cost as % of
portfolio)
-*
Synergy Trade-off Inconclusive

17. Hypothesis:
MFIs with higher borrower retention will have lower risk profiles
and have lower rates of staff turnover (previous MIX finding)
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
17
Select findings: borrower retention
Research question:
Is borrower retention correlated with efficiency or risk indicators?
Synergies:
• Borrower retention negatively
correlated with staff turnover
• No significant relationship
found between borrower
retention and PAR30 or PAR90
Trade-offs:
• Borrower retention positively
correlated with average staff
salary (likely via staff turnover)

18. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is
positively correlated with average salary.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
18
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+ +
Efficiency
(operating
cost as % of
portfolio)
-* +*
Synergy Trade-off Inconclusive

19. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
19
Select findings: gender balance of
management/board
Research question:
Do equality HR policies promote gender balance within an organization?
(Are higher proportions of female board/staff correlated with
gender differences in social or financial performance?)
Hypothesis:
MFIs with equality HR policies will have greater proportions of female
board/staff. MFIs with more female board/staff will show better
gender performance.

20. ?
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
20
Summary of SP-SP correlations
Staff incentives Staff turnover
Presence of
female staff
Borrower
retention rate + -
Equality in HR
policy
Women’s
outreach
Synergy Trade-off Inconclusive

21. Hypothesis:
MFIs with equality HR policies will have greater proportions of female
board/staff. MFIs with more female board/staff will show better
gender performance.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
21
Select findings: gender balance of
management/board
Research question:
Do equality HR policies promote gender balance within an organization?
(Are higher proportions of female board/staff correlated with
gender differences in social or financial performance?)
Synergies:
• No significant relationship
found between equality HR
policies and gender balance
• Weak positive correlation
between female staff and women
borrower outreach (LAC only)
Trade-offs:
[none]

22. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
22
Summary of SP-SP correlations
Staff incentives Staff turnover
Presence of
female staff
Borrower
retention rate + -
Equality in HR
policy
Women’s
outreach +*
* Weak positive correlation between presence of women in staff/board and higher women
borrower outreach for LAC dataset only. We are currently performing this analysis for
the global dataset.
Synergy Trade-off Inconclusive

23. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
23
Select findings: poverty targeting
Research question:
Is there a correlation between (1) poverty reduction as a goal, (2)
MFIs offering products designed specifically for the poor, (3)
ability to report poverty data, (4) number of clients below
poverty, and (5) provision of consumption loans? (What about with
other financial/operational indicators?)
Hypothesis:
(1), (2), (3), and (4) will be positively correlated with each other and
negatively correlated with (5).

24. ?
* Staff turnover rate is negatively correlated with average salary and borrower retention rate is
positively correlated with average salary.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
24
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+ +
Efficiency
(operating
cost as % of
portfolio)
-* +*
Synergy Trade-off Inconclusive

25. Hypothesis:
(1), (2), (3), and (4) will be positively correlated with each other and
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
25
Select findings: poverty targeting
Research question:
Is there a correlation between (1) poverty reduction as a goal, (2)
MFIs offering products designed specifically for the poor, (3)
ability to report poverty data, (4) number of clients below
poverty, and (5) provision of consumption loans? (What about with
other financial/operational indicators?)
Synergies:
• MFIs with a specific poverty
target have lower PAR30 (average
2.5% lower)
Trade-offs:
• Reporting poverty levels negatively
correlated with consumption loans
• MFIs without a specific poverty focus
are more efficient (average operating
expenses/GLP 7% lower) and higher
ROA (average 2.2% higher)
negatively correlated with (5).

26. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is
positively correlated with average salary.
** MFIs without a specific poverty focus exhibit a higher level of efficiency.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
26
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+ + -
Efficiency
(operating
cost as % of
portfolio)
-* +* +**
Synergy Trade-off Inconclusive

27. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
27
Select findings: governance
Research question:
Do MFIs with a stronger level of board commitment to SPM
demonstrate differences in process or performance indicators?
Hypothesis:
MFIs with standing SP committees on their board will show higher
levels of SP outcome reporting.

28. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is
positively correlated with average salary.
** MFIs without a specific poverty focus exhibit a higher level of efficiency.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
28
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
-
Portfolio
quality
(PAR30 and
PAR90)
+ + -
Efficiency
(operating
cost as % of
portfolio)
-* +* +**
Synergy Trade-off Inconclusive
?

29. Hypothesis:
MFIs with standing SP committees on their board will show higher
levels of SP outcome reporting.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
29
Select findings: governance
Research question:
Do MFIs with a stronger level of board commitment to SPM
demonstrate differences in process or performance indicators?
Synergies:
• Standing SP committees are
positively correlated with
borrowers per loan officer
(average of 75 more clients)*
Trade-offs:
[none]
* MIX’s desk review experience leads us to think that this difference is probably due more to the
presence of an SP champion at the board level.

30. * Staff turnover rate is negatively correlated with average salary and borrower retention rate is
positively correlated with average salary.
** MFIs without a specific poverty focus exhibit a higher level of efficiency.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
30
Summary of SP-FP correlations
Staff
incentives
Staff
turnover
Borrower
retention
rate
Poverty
targeting
SP committee
(SP
champion)
Productivity
(borrowers
per loan
officer)
- +
Portfolio
quality
(PAR30 and
PAR90)
+ + -
Efficiency
(operating
cost as % of
portfolio)
-* +* +**
Synergy Trade-off Inconclusive

31. This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
31
Key findings
Human resources:
• Staff incentives linked to portfolio quality and borrower retention
associated with better outcomes in those areas
• Higher staff turnover associated with higher risk (PAR30 and PAR90), with
lower borrower retention, and with higher operating expense (average
salary)
Poverty targeting:
• Poverty targeting associated with lower risk (PAR30)
• Poverty targeting associated with lower efficiency/ROA
• Client poverty reporting associated with not providing consumer loans
Governance:
• Strong board commitment to SP associated with better productivity
(borrowers per loan officer)

32. MIX Global and Project Partners
MIX partners with a dedicated group of industry leaders:
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.
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33. Microfinance Information Exchange
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presentation without MIX’s prior written permission is strictly prohibited.
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