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The Vulnerability of Microfinance to Financial Turmoil – Evidence from the Global Financial Crisis

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  • Wagner, Charlotte
  • Winkler, Adalbert

Abstract

Has microfinance become crisis-prone like other sources of finance? This paper provides empirical evidence on credit growth patterns of microfinance institutions in the early 2000s. Results suggest that microfinance has become vulnerable to financial turmoil. In the global financial crisis credit growth dropped sharply. Moreover, the crisis impact was more severe when institutions had been active in tapping domestic and international financial markets for funds and had operated in countries experiencing a severe post-crisis recession. Finally we find that microcredit adopted the cyclical characteristics of credit growth in the traditional banking sector, with credit booms followed by credit busts.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 51 (2013)
Issue (Month): C ()
Pages: 71-90

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Handle: RePEc:eee:wdevel:v:51:y:2013:i:c:p:71-90

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: financial stability; microfinance; credit growth; global financial crisis;

References

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Cited by:
  1. Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.

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