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Interest rate and the social performance of microfinance institutions

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  • Adusei, Michael

Abstract

The objective of this paper is to examine the effect of interest rate on the social performance of microfinance institutions (MFIs). This objective is pursued by employing data from 555 MFIs operating in 74 countries. The econometric techniques utilized in this paper have produced robust results suggesting that interest rate boosts the social performance (both the breadth and depth of outreach) of MFIs. The paper explains this outcome with no-alternative hypothesis. Clients of MFIs are mostly poor and, thus, lack access to alternative sources of funding. This compels them to access microcredit at any interest rates.

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  • Adusei, Michael, 2021. "Interest rate and the social performance of microfinance institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 21-30.
    • Handle: RePEc:eee:quaeco:v:80:y:2021:i:c:p:21-30
    DOI: 10.1016/j.qref.2021.01.009
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    More about this item

    Keywords

    Interest rates; Social performance; Microfinance institutions;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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