Understanding the accounts of financial service providers
Nobody is in any doubt that money lending is a business activity, so that means savings groups, banks and microfinance institutions should all have accounts which can be analysed like any other business. Where does their money come from and what do they do with it?
In this lesson you will join Anya who works for an NGO in Povertia. She is finding out about the business of money lending by visiting and constructing accounts for different types of financial service providers.
Go with her to visit Grace’s savings group, a branch of Povertia Rural Bank and MUMFI, a specialised microfinance institution. You will need to help Anya construct balance sheets and profit and loss accounts for these institutions, so do work through lessons 4 and 5 first if you are not familiar with simple accounts.
Anya finds out that you can calculate special ratios to interpret the accounts of financial institutions and microfinance providers can compare their ratios with those of similar institutions in the Micro Banking Bulletin!.
The figures used in this lesson are highly simplified to make calculations quicker and dollars are used as the currency symbol.
