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Between
1980 and 1998 more than 700 natural disasters occurred
in Latin America (363 in South America, 200 in Central
America, and 163 in the Caribbean), as a result 72,000
people died, 5 million lost their homes, and more than
100 million were affected both economically and socially.
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 Are
relatively small in terms of the overall system (measured
in terms of financial assets) and thus are not normally
candidates for access to public sector sponsored facilities
providing emergency liquidity relief. |
Will
probably have to reduce their loan disbursements, affecting
their clients’ capacity to recover and, therefore,
creating more unemployment and recession. |
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The
event is systemic in nature, affecting a particular geographic
area. |
There
is a widespread need for quick access to funds to meet a
sudden increase in the demand of micro credit. This behavior
is extensive and not particular to individual institutions. |
The
origin of the illiquid condition is exogenous and therefore
beyond the control of individual MFIs. |
External
shocks, both natural and man-made that cause an unexpected
demand for liquidity are considered emergencies. The following
is a non-exhaustive list of natural, man-made or technology
induced disasters than can cause liquidity shortages: floods,
earthquakes, hurricanes, droughts, cold waves, wild fire,
landslides, blackouts, widespread failure of telecommunications
or computer failure, civil unrest or political uncertainty,
“bank holidays”, or events that reduce the confidence
on the financial system. |
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