Credit risk management in a microfinance organization based on the unit economics model

Subject. This article discusses the issues of credit risk management in a microfinance organization based on the unit economics model. Objectives. The article aims to develop an effective economic and mathematical model of unit economics for measuring the credit risk of a microfinance organization borrower. Methods. For the study, I used economic and mathematical modeling. Results. The article interprets the concept of Unit Economics in relation to the peculiarities of doing business by a microfinance organization. The article finds that there is no methodology for assessing the unit economics in relation to the specifics of the microfinance organization's activities, and presents an author-developed economic and mathematical model of unit economics, which is based on the client model of unit economics and business metrics of interaction between the microfinance organization business and the borrower. Conclusions. The developed model helps assess the unit economics of primary loans and re-borrowing, as well as the custody value of the client. The model can be integrated into the risk analysis system of any microfinance organization.