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Is the model “loans‐plus‐savings” better for microfinance in Eastern Europe and Central Asia? A propensity score matching comparison

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  • Knar Khachatryan
  • Vardan Baghdasaryan
  • Valentina Hartarska

Abstract

Microfinance institutions are gradually evolving into multiservice organizations offering not only loans but also savings, and other financial and nonfinancial services. We contribute to the literature aimed at identifying how combining credit with savings affects outreach and sustainability in microfinance institutions (MFIs). We apply the propensity score matching method as well as its augmented dose–response version to compare the performance of loans‐plus‐savings MFIs with that of lending‐only in a sample of 710 observations from Eastern Europe and Central Asia. Owing to our unique capital structure data, we control for the use of subsidized capital, which related work ignores while existing evidence points to tradeoffs between subsidies and savings. We find that financial performance and breadth of outreach are positively associated with savings mobilization, while the evidence on depth of outreach points to a possible mission drift.

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  • Knar Khachatryan & Vardan Baghdasaryan & Valentina Hartarska, 2019. "Is the model “loans‐plus‐savings” better for microfinance in Eastern Europe and Central Asia? A propensity score matching comparison," Review of Development Economics, Wiley Blackwell, vol. 23(3), pages 1309-1330, August.
    • Handle: RePEc:bla:rdevec:v:23:y:2019:i:3:p:1309-1330
    DOI: 10.1111/rode.12589
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    Cited by:

    1. Zhu, Huanyu & Ma, Wanglin & Vatsa, Puneet & Zheng, Hongyun, 2023. "Clean energy use and subjective and objective health outcomes in rural China," Energy Policy, Elsevier, vol. 183(C).
    2. Wanglin Ma & Puneet Vatsa & Hongyun Zheng & Yanzhi Guo, 2022. "Does online food shopping boost dietary diversity? Application of an endogenous switching model with a count outcome variable," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-19, December.
    3. Shrabanti Maity, 2023. "Financial inclusion also leads to social inclusion—myth or reality? Evidences from self-help groups led microfinance of Assam," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-22, December.
    4. Ma, Wanglin & Ma, Wanglin & Zheng, Hongyun, 2021. "Impacts of Cooking Fuel Choices on Subjective Well-Being: Insights from Rural China," 2021 Conference, August 17-31, 2021, Virtual 315149, International Association of Agricultural Economists.
    5. Diamanta Sojeva & Armand Krasniqi & Mejdi Bektashi, 2020. "Legal Regulation of Microfinance Institutions as NGOs Following the Judgment of the Constitutional Court," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 515-524.
    6. Ma, Wanglin & Vatsa, Puneet & Zheng, Hongyun, 2022. "Cooking fuel choices and subjective well-being in rural China: Implications for a complete energy transition," Energy Policy, Elsevier, vol. 165(C).

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