Credit Risk Assessment in the Microfinance Industry : An Application to a Selected Group of Vietnamese Microfinance Institutions and an Extension to East Asian and Pacific Microfinance Institutions

This paper discusses credit risk assessment through conventional and specialized credit evaluation metrics. I find that low credit risk is a direct consequence of sound implementation of good governance practices and sustainable financial performance through sound qualitative and quantitative risk management tools. Furthermore, I find that the depth and breadth of outreach and write-off are by some margin the two most important determinant indicators of a microfinance institutions' (MFI's) credit risk control. In addition, I demonstrate that there is no significant statistical difference in terms of risk management among the different types of MFIs. Results also suggest that constructive regulation to promote MFIs has a nonnegligible impact on the risk assessment of MFIs