|
on Microfinance |
| By: | Farrukh Nematov (The Central Bank of Uzbekistan) |
| Abstract: | This paper develops a risk-based stress-testing framework for emerging microfinance banks using a structural vector autoregressive (SVAR) approach. The model captures the dynamic transmission of key macroeconomic shocks, including economic activity, monetary policy, and exchange-rate movements, to supervisory-relevant banking indicators, including nonperforming loans, capital adequacy, and lending behaviour. The empirical analysis focuses on identifying macro-financial transmission channels that are particularly relevant for supervisory stress testing in newly established banking segments. Impulse response functions are used to derive baseline and adverse macroeconomic scenarios and to evaluate how shocks propagate to banking-sector risk indicators over time. The results highlight the important role of external and monetary shocks in shaping asset quality and capital resilience, underscoring the relevance of macro-financial linkages for the supervision of microfinance banks. The framework proposed in this study provides a transparent and operational tool for translating macroeconomic disturbances into supervisory risk indicators and supports the implementation of risk-based supervision as the microfinance banking sector develops in Uzbekistan. |
| Keywords: | stress testing; SVAR; macro-financial linkages; microfinance banks; exchange rate shocks; capital adequacy; non-performing loans |
| JEL: | C32 E44 E58 F31 G21 G28 |
| Date: | 2026–04–21 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp12-2026 |
| By: | Kodongo, Odongo |
| Abstract: | Data from the Central Bank of Kenya show that, in the 12 months to December 2024, the banking sector generated approximately 35.3% of its overall lendingrelated income from the MSME sector, almost half of which was from small and microenterprises (SMEs). During the same period, banks and microfinance banks extended less than 20% of their combined credit to SMEs. This paper explores reasons for the suboptimal lending by banks to SMEs using an analytical framework that draws from the literature and lending practices in different contexts. The major reasons for suboptimal SME lending by banks include perception of higher risks and inadequate institutional arrangements. The paper makes several recommendations at the policy level and at the bank level to address the identified problems. |
| Keywords: | Small and microenterprises, banks, credit, Kenya |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340182 |
| By: | Muli, Anthony; Ndwiga, David; Agung, Raphael; Njoroge, Samantha |
| Abstract: | The study seeks to examine the effects of credit guarantee schemes on Micro, Small and Medium-sized Enterprises (MSME) lending. Specifically, the paper examined the performance of a specified credit guarantee scheme, effect of the credit guarantee scheme on MSME loan default probability and how loan repayment performs across different sectors. The study utilised bank level data for 2, 398 MSMEs under the specified credit guarantee scheme. The study found that the credit guarantee scheme improves MSMEs access to formal credit. Furthermore, low default rate was reported based on firm count. Regarding credit guarantee coverage ratio - default probability nexus, this study established existence of moral hazard effect which is statistically significant. However, across different sectors, short run models find credit guarantee moral hazard sectoral bias, largely elevated in agriculture, building and construction, trade and manufacturing sectors. Additionally, default risk was found to reduce with firm age. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340176 |