| A |
Autonomous Region (AR) |
Equivalent of a province; but because of large population of non-Han Chinese Minority nationality peoples, theoretically has more autonomy than a province |
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ABC |
see Agricultural Bank of China |
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ADBC |
see Agricultural Development Bank of China |
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Aging Analysis |
Study of delinquent loans classified by length of time in arrears, to enable an MFI to set an appropriate loan loss reserve |
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Agricultural Bank of China |
Agricultural Bank of China was established in 1979, headquartered in Beijing. The ABC has service outlets and an electronic banking network reaching every county seat in China. The ABC has a special credit unit dedicated to giving micro-entreprise credit in pilot regions. |
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Agricultural Development Bank of China |
see policy banks |
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Apex institution |
Wholesale institution that provides financial or management sevices to microfincance institutions |
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Active Clients: |
The number of clients with loans outstanding on any given date. An institution's official statistics on active clients are usually recorded as the number of clients with loans outstanding on the date its financial statements are filed. |
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Active Loan Portfolio |
The total amount loaned out less the total amount of repaid loans; i.e., all money that is "on the street" or owed to the institution in the form of loans on the date the report is filed. |
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Assessment: |
Also called evaluation. Assessments include instrumental appraisals, rating exercises, and other activities that may determine how well an institution performs financially, operationally, and managerially. |
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Arrears |
Amount of loan principal that has become due but has not been received by the MFI |
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Arrears |
Amounts due on loans in the past that were not paid |
| B |
Bank of China |
Bank of China is mainly engaged in commercial banking, including corporate and retail banking, treasury business and financial institutions banking. |
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Bank of Communications |
Commercial Bank established in Shanghai |
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Base Lending rate |
The one-week lending interest rate set by the PBOC |
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Baseline Study |
Survey conducted, usually to establish state of communities' economic status before an intervention with financial or other services so as to be able to testify to economic status after the intervention |
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Benchmarking: |
Peer group benchmarking puts performance measurements in context by comparing an institution with similar institutions based on a common factor, such as region, size or methodology. A benchmark can also refer to the standard against which all similar institutions are compared. |
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Bridge financing: |
Interim financing used to solidify a position until more permanent financing can be made. The ACCION Latin America Bridge Fund provides bridges from microfinance institutions to local capital markets. |
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Business Training |
Non-financial services for MFO or MFI clients |
| C |
CAMEL analysis system |
Stands for capital adequacy, asset quality, management, earnings and liquidity |
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Capacity Building |
Training whose goal is the introduction of new management skills and knowledge for MFIs and MFOs |
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Capital adequacy |
Amount of capital relative to assets of an MFI |
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Cash flow analysis |
Cashflows of MFI relative to cash needed for operations plus funds available for investment |
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CBRC |
see China Banking Regulatory Commission |
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CCB |
see China Bank of Construction |
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CDB |
see China Development Bank |
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CGAP |
see Consultative Group to Assist the Poor |
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China Bank of Construction |
China Construction Bank (CCB), specializes in medium to long-term credit for long term specialized projects, such as infrastructure projects and urban housing development. |
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China Banking Regulatory Commission |
The regulatory authority over all formal financial institutions in China, also the promotor of the "village bank" initiative in rural areas of China |
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China Development Bank |
Has been state bank charged with financing the building of China's infrastructure; more recently the bank has been expressing the need to transform itself into a more commercial entity |
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China Industrial and Commercial Bank |
Industrial & Commercial Bank of China (ICBC), has a special credit unit dedicated to giving micro-entreprise credit in pilot regions. |
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City Commercial Banks |
City commercial banks evolved from urban credit co-operatives. Due to their history, mandate and capital strength, the scope of city commercial banks' business tends to be concentrated in the city where they are located, though this has been changing since 2007, when Harbin Bank extended branch operations to Dalian and then Tianjin. |
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Collateral |
Property, land, group/personal guarantees, fixed/movable assets, compulsory savings, assets |
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Commercial Banks (Big Four) |
see Agricultural Bank of China, China Industrial and Commercial Bank, China Construction Bank and Bank of China |
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Commission for Reform and Development |
see Reform and Development Commission |
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Consultative Group to Assist the Poor |
Launched in June 1995 to strengthen donor coordination in MF, to set up and disseminate best practices in MF, to support mFIs catering to the poor. CGAP's goal is to expand the level of resources reraching the poorest of the economically active poor. |
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Cooperatives |
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County |
Lowest Administrative Level of formal government |
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Credit |
Borrowed funds with specific terms for repayment |
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Credit Committee |
Committee that evaluates loan applications, especially in invididual lending methodologies |
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Credit Guaratee Companies |
see Non-bank Financial Institutions in China |
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Credit Scoring: |
Measures the risk associated with each credit applicant/ microborrower. Credit scoring is an automated system that assigns points for various credit factors, providing lenders with the ability to grade prospective clients and to calculate the risk of extending credit. In a microfinance context, the credit scoring method is modified to take into account a microentrepreneur's experience, character and capacity to repay. The final credit score is an overall measure of the creditworthiness of the credit applicant. |
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Credit Unions |
A nonprofit, cooperative financial institution owned and run by its members. Members pool their funds to make loans to one another. The volunteer board that runs each credit union is elected by the members. Most credit unions are organized to serve people in a particular community, group or groups of employees, or members of an organization or association. |
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current ratio |
see liquidity adequacy ratio |
| D |
Debt Capacity |
Ability of a client to repay borrowed funds |
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Declining Balance Method |
A way of calculating as a percentage of the amount outstanding over the course of the loan term |
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Depth of Outreach |
The level of poverty reached by an MFI or MFO |
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Default: |
Failure to make timely payment of interest or principal on a loan, or to otherwise comply with the terms of a loan. |
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Direct Targeting |
Selecting a particular social group or segment of the economy for credit services |
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Disbursement: |
The actual transfer of financial resources. The disbursement of a microloan reflects the transfer of the loan amount from the lending institution to the borrower. |
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Downscaling |
|
| E |
Efficiency Indicator |
see Operating Cost ratio |
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Equity |
|
| F |
Financial Cooperatives |
Member-owned cooperatives that have no external shareholders |
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Financial Sustainability |
The ability of an MFI or MFO to cover its costs (including cost of capital) with earned revenue |
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Financial Self-Sufficiency (FSS): |
Total operating revenues divided by total administrative and financial expenses, adjusted for low-interest loans and inflation. In a microfinance context, an institution is financially self-sufficient when it has enough revenue to pay for all administrative costs, loan losses, potential losses and funds. |
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Financial Viability |
see Financial Sustainability |
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Fixed Assets |
Long-lived property of a microentrepreneur or firm that is used in that business' production (i.e., a sewing machine is a fixed asset for a microentrepreneur who makes clothing). Fixed-asset lending is a type of microfinance product that disburses loans expressly for the purpose of purchasing these fixed assets, which aid in production volume and income. |
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Fixed-Asset Lending/ Loan: |
Microfinance product in which loans are disbursed expressly for the purpose of purchasing fixed assets, which aid in production volume and income. |
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Flat method |
Method for calculating interest as percentage of initial amount of loan; amount payable is thus fixed throughout the loan term |
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Foreign Banks in China |
After China's banking sector started opening up to foreign competition on December 11, 2006, the number of foreign banks and the scope of their operations has greatly expanded. As of the end of December 2006, there were a total of 274 foreign banks operating in China, including 14 locally incorporated foreign-funded banks, 74 with branches in China, and 186 with representative offices |
| G |
Gap analysis |
Determination of the the gap between rate-sensitive assets and rate-sensitive liabilities |
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Getihu or Individual Entrepreneur |
Usually entrepreneur who registers with the government in this category and is self-employed |
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Grameen lending |
Grameen Bank pioneered group or solidarity lending, giving rise to this usage |
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Group lending |
Lending to a group of people who have common wish to borrow and act as each others' guarantors. In China, members of groups are not permitted to be relatives. |
| H |
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| I |
ICBC |
see China Industrial and Commercial Bank |
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Idle Funds or Idle Cash |
Funds held by an MFI or MFO that are not being put to work to create earnings for the organization |
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Impact analysis |
Determination and analysis of the outcome of an intervention |
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Individual Lending |
|
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Integrated MFIs or MFOs |
Organizations offering social and economic development services in addition to financial intermediation |
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Interest |
|
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Interest Rate Limit |
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| J |
Joint-stock commercial banks |
Shareholding or joint-stock commercial banks are incorporated as joint-stock limited companies under the People's Republic of China's Company Law. Most of them have majority state ownership |
| K |
|
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| L |
Lending companies |
see Non-bank Financial Institutions in China |
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Leverage |
The amount of money borrowed by an MFI relative to the amount of its equity. |
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Liquidity |
The amount of cash available to an MFI or MFO relative to its demand for cash |
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Liquidity adequacy ratio |
ratio indicating MFI's ability to use short-term assets to cover debt-service payments |
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Liquidity ratio |
A calculation determining whether enough cash is available for disbursements and whether there is too much idle cash |
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Liquidity risk |
The risk of not having enough to meet demands for cash, leading to extra expenses in obtaining short-term funds to fund an illiquid position |
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Loan Loss Ratio |
Calculation determining the rate of loan losses for a specific period, such as a year |
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Loan Loss Reserve |
Amount of provision for loan losses (cumulative) minus written-off loans. This is usually recorded as an expense on the income statement and as a negative asset on the balance sheet. |
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Loan Loss Reserve Ratio |
Calculation showing the percentage of the loan portfolio that is reserved for future loan losses |
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Loan meeting |
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Loan Officers |
|
| M |
MCC |
see MicroCredit Company |
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MFI |
Legally registered Microfinance institution |
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MFO |
Organization offering microfinance informally (may not be registered; may be part of government in China.) |
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Micro-credit |
The furnishing of loan services to low-income clients. |
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MicroCredit Company or MCC |
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Micro-enterprise |
Usually, an enterprise employing no more than 6 people including the founder |
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Microfinance |
The furnishing of financial services to low-income clients. As opposed to the term Micro-credit, microfinance can include all manner of authorized financial services. |
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Microfinance Plus or + |
Usually, an activity which distritubutes a service or donation via an MFI or MFO, using it as a channel to reach its clients. |
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Micro-insurance |
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Municipalities |
Extremely large cities and their surroundings, which have the same administative authority as China's provinces. As of October 2008, the municipalities are Beijing, Shanghai, Chongqing and Tianjin |
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Municipality |
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| N |
NDRC |
see Reform and Development Commission |
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Nominal interest |
|
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Non-bank Financial Institutions in China |
Non-bank financial institutions: Non-bank financial institutions represent approximately 1.8% of China’s total assets, which has decreased by about 50% in the last 5 years. However, there remain more than 4,000 credit guarantee companies in China, some of which informally provide direct micro and small business lending. In addition, there are approximately 2,400 non-banking lending companies with a combined business volume of RMB 100 billion per year, according to International Finance Corporation statistics. |
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Non-Fixed Assets |
Only recently accepted by certain organizations in China as collateral, this will generally include machinery, commercial inventory, and locked vehicles. |
| O |
Operating cost ratio |
A determination of the level of operating costs compared to the outstanding loans. |
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|
A measure of financial efficiency equal to total operating revenues divided by total administrative and financial expenses. If the resulting figure is greater than 100, the organization under evaluation is considered to be operationally self-sufficient. In microfinance, operationally sustainable institutions are able to cover administrative costs with client revenues. |
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Outreach |
Actions leading to reaching people outside current client base of an MFI or MFO |
| P |
PAO |
see Poverty Alleviation Office |
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PBoC |
see People's Bank of China |
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People's Bank of China |
The central policy Bank of The People's Republic of China |
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Performance Indicators |
Ratios comparing one piece of financial data to another. See also |
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PERLAS or PEARLS |
39 financial ratios used by World Council of Credit Unions to monitor credit union performance |
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Policy Banks |
in 1994, the Chinese government established three policy banks that touch on the lives of the rural poor. Agricultural Development Bank of China is mandated by the CBRC as the key to providing policy-related financial services for agriculture, rural areas, and farmers. China Development Bank is charged by the CBRC with exploring new ways to deliver financial services to the rural areas. The China Import-Export Bank is responsible for supporting agricultural businesses to “go global” under the guidance of the CBRC. |
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Portfolio at Risk |
Outstanding balance of all loans that have an amount due plus arrears |
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Portfolio Diversification |
Avoidance of too great a concentration of risk in a particular economic activity or region |
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Portfolio Outstanding |
Amount of loan principal outstanding in an MFI or MFO |
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Portfolio Quality Ratios |
Calculations showing percentage of non-earning assets |
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Poverty Alleviation Office |
Office under the State Council in charge of work related to poverty alleviation |
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Productivity |
Volume of business generated from a particular resource or asset |
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Productivity & Efficiency Ratios |
Calculations showing rate at which an MFI or MFO generates revenue to cover expenses |
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Province, ARs and Municipalities |
There are 32 provinces, autonomous regions and municipalities listed by China. |
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PSCB |
The China Postal Savings Bank was inaugurated on March 20, 2007, becoming the country's fifth largest bank. This marked a huge step in China's financial reform, as well as opportunities for the development of rural finance, as approximately 60% of the bank's clients are located in rural areas |
| Q |
|
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| R |
Rating |
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Refinancing a Loan |
Providing an amount of loan in addition to the original amount of the loan |
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Reform and Development Commission |
The National Development and Reform Commission is a macro-economic management agency under the State Council, which studies and formulates policies for economic and social development, and maintains a balance of economic aggregates to guide the overall economic system restructuring. It is a combinantion of the functions of the predecessors, the State Planning Commission and State Economic Commission. |
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Renminbi |
|
| |
Repayment Rate |
Historic Rate of loan recovery, measuring repayments made against actual amount due |
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Return on Assets |
Ratio measuring net incomeearned on the assets of an MFI or MFO |
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Return on Equity |
Ratio measuring the return on funds that are owned by the MFI or MFO |
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RMB |
see Renminbi |
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Rural credit cooperatives |
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| S |
SAFE |
see State Administration for Exchange Control |
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Scale of Outreach |
Number of clients served by an organization |
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SME |
|
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Social Capital |
The result of coordination and cooperation for mutual benefit among humans, featuring trust, relationships and networks of people. Group lending relies on the value of these relationships to people to be effective as guarantees. |
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Spread |
The difference between the interest paid on loans taken out by an MFI and the rate of interest the MFI charges on the loans it distributes |
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State Administration for Exchange Control |
Administration in charge of regulating and managing all matters related to foreign exchange in China. |
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State Banks or The Big Four |
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| T |
Township |
Administration level situated between the county and the village. |
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Transparency: |
The degree of a financial institution/ MFI's openness as determined by a sequence of financial information-gathering and testing. A transparent microfinance organization gathers and reports accurate financial information on its own, to be verified and analyzed by external parties. These external authorities ensure that the MFI's performance complies with appropriate industry standards. |
| |
Trend Analysis |
Comparison of performance indicators over a period of time |
| U |
Upscaling |
Helping a non-regulated microcredit organization become a fully-fledged bank |
| V |
Village Bank |
Bank set up under CBRC initiative to allow local small organizations to set up a financial institution permitted to take deposits if the founding structure features a minimum 20 percent holding of shares by an existing financial institution |
| W |
Wholly-foreign-owned enterprise |
A registered limited liability company whose shareholders are all non-Chinese entities or individuals |
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WOFE |
see Wholly-foreign-owned enterprise |
| X |
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| Y |
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| Z |
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