Microfinance Simulation

In the simulation, participants will:

• Analyze profiles of potential micro-entrepreneur clients.

• Allocate loan capital across different risk-return client segments.

• Set interest rates that cover costs but remain fair and client-friendly.

• Hire and manage loan officers, balancing outreach with efficiency.

• React to unexpected events affecting clients or the institution.

• Interpret key MFI performance dashboards (financial and social).

• Strategize to grow their loan portfolio while controlling risk.

• Present a balanced scorecard of their MFI’s performance.

• Articulate the dual-bottom-line mission of a modern MFI.

• Analyze the trade-offs between reaching the poorest clients and ensuring institutional viability.

• Calculate and interpret core microfinance metrics (PAR, OSS, Yield).

• Design a loan portfolio strategy that aligns with a chosen social mission.

• Evaluate how operational decisions impact both clients and the institution’s health.

• Develop a resilient strategy to handle external economic and climatic shocks.

1. Form Teams Each team operates as the management committee of an MFI.

2. Initial Setup Teams review starting capital, operational costs, and the initial market of client profiles.

3. Decision Rounds Over multiple rounds (representing 6-12 months each), teams make sequential decisions on client selection, loan terms, staffing, and potential new products.

4. Results and Analysis After each round, teams receive a detailed report showing their financial results, social impact metrics, and changes in their client base.

** 5. External Events** Randomly drawn "Event Cards" introduce realistic challenges and opportunities, forcing adaptive management.

** 6. Final Review** The simulation culminates in a final review period where teams assess their multi-period performance and present their strategy and outcomes, arguing whether they achieved an optimal balance.

• What are the learning outcomes of this simulation? Participants gain practical skills in dual-bottom-line management, financial analysis for MFIs (like calculating Portfolio-at-Risk), strategic client selection, and responding to economic shocks, all within an ethical framework focused on poverty alleviation.

• Is this simulation suitable for undergraduate students? Absolutely. The simulation is designed for undergraduates in business, economics, development studies, and social entrepreneurship. It requires no prior specialized finance knowledge, making it highly accessible and engaging.

• How long does the Microfinance Simulation take to run? The core simulation can be run in a 2-3 hour workshop format or extended over multiple class sessions for deeper analysis and debriefing. It is highly flexible for academic or corporate training schedules.

• Do participants need any special software? No special software is needed. The simulation is 100% browser-based and runs on any modern device (laptop, tablet, or desktop) with a standard internet connection.

• How is the social impact measured in the simulation? Social impact is quantified through a balanced scorecard including metrics such as number of clients served, poverty level improvement, jobs sustained, female clients empowered, and geographic reach into underserved villages.

• Can this simulation be used for executive education? Yes. For executives in banking, CSR, or social impact investing, the simulation provides a rapid, deep dive into the unique challenges of inclusive finance and stakeholder management beyond pure profit maximization.

• What makes this simulation different from a traditional finance exercise? Unlike traditional exercises focusing solely on profit, this simulation forces a constant evaluation of trade-offs between financial returns and social good. It teaches that long-term viability depends on successfully integrating both.

• Depth and logic of scenario analysis

• Ability to adapt and revise valuations in light of news shocks or changes

• Collaboration, division of work, integration of roles, and final coherence

• Rating by peers and self-reflection on approach and decisions