Abstract
This paper discusses the evaluation of loan collection performance in a specialized term-credit program introduced in Indonesia to promote the development of small-scale enterprises. After outlining pertinent characteristics of the credit program, the available collection performance indicators are described and appraised. It is shown that program managers and bankers had access to quite a lot of data on collection performance, but none that provided meaningful information for evaluating loan recovery. The paper then examines sources of the evaluation problem, and suggest methods for developing more accurate and less ambiguous indicators of portfolio quality, loan recovery rates, and ultimate bad debt costs.
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