Social Performance Assessment (SPA) for Lenders to Small and Medium Sized Enterprises (SME)

Moody's Analytics, Inc., a subsidiary of Moody's Corporation, helps capital markets and credit risk management professionals worldwide respond to an evolving marketplace with confidence. The company offers unique tools and best practices for measuring and managing risk through expertise and experience in credit analysis, economic research and financial risk management. By offering leading-edge software and advisory services, as well as the proprietary credit research produced by Moody's Investors Service, Moody's Analytics integrates and customizes its offerings to address specific business challenges.

Micro, Small and Medium Enterprises (MSMEs) are a driving force in economic development. In many countries it is difficult for MSMEs to raise capital from traditional financial sources. There are a growing number of specialized financial institutions that target MSME enterprises. Given the lack of flexibility MSMEs have in the markets it is important that their funders act in a socially responsible manner towards these customers. Increasingly institutions such as the IFC, the Asian Development Bank and other development agencies and social investors, who make loans to these financial institutions, want a way to measure the social responsibility of these MSME lenders towards their customers. This project will look at establishing metrics for this market and determining what factors should be considered in evaluating if an MSME lender is acting in a responsible manner. This project will build upon work done by Moody's Analytics in building a social performance assessment for microfinance banks. The ultimate goal is to establish a social rating system for MSME lenders.