MFI Liquidity Problems After a Natural Disaster

After a natural disaster, access to adequate liquidity is one of the most difficult issues microfinance institutions (MFIs) face. As MFIs quantified their liquidity needs in the wake of 1998’s large natural disasters, a picture emerged that points to the general magnitude of the problem. This brief seeks to document this evidence and point to ways to head off or resolve potential liquidity crises when sudden disasters strike.

This brief is one in a series of five Microenterprise Best Practices (MBP) Technical Briefs focused on MFI response to rapid-onset natural disasters. These briefs discuss the potential interventions and actions that MFIs could undertake in the aftermath of a disaster, based on the experiences of MFIs from Hurricane Mitch and the Bangladesh flood of 1998.