The Vulnerability of Microfinance to Financial Turmoil – Evidence from the Global Financial Crisis
AbstractHas 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal World Development.
Volume (Year): 51 (2013)
Issue (Month): C ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/worlddev
financial stability; microfinance; credit growth; global financial crisis;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Giuliano, Paola & Ruiz-Arranz, Marta, 2009.
"Remittances, financial development, and growth,"
Journal of Development Economics,
Elsevier, vol. 90(1), pages 144-152, September.
- Giuliano, Paola & Ruiz-Arranz, Marta, 2006. "Remittances, Financial Development, and Growth," IZA Discussion Papers 2160, Institute for the Study of Labor (IZA).
- Marta Ruiz-Arranz & Paola Giuliano, 2005. "Remittances, Financial Development, and Growth," IMF Working Papers 05/234, International Monetary Fund.
- Roberts, Peter W., 2013. "The Profit Orientation of Microfinance Institutions and Effective Interest Rates," World Development, Elsevier, vol. 41(C), pages 120-131.
- Valentina Hartarska & Denis Nadolnyak, 2007. "Do regulated microfinance institutions achieve better sustainability and outreach? Cross-country evidence," Applied Economics, Taylor & Francis Journals, vol. 39(10), pages 1207-1222.
- Ahlin, Christian & Lin, Jocelyn & Maio, Michael, 2011. "Where does microfinance flourish? Microfinance institution performance in macroeconomic context," Journal of Development Economics, Elsevier, vol. 95(2), pages 105-120, July.
- Enrique G. Mendoza & Marco E. Terrones, 2008.
"An Anatomy Of Credit Booms: Evidence From Macro Aggregates And Micro Data,"
NBER Working Papers
14049, National Bureau of Economic Research, Inc.
- Enrique G. Mendoza & Marco E. Terrones, 2008. "An anatomy of credit booms: evidence from macro aggregates and micro data," International Finance Discussion Papers 936, Board of Governors of the Federal Reserve System (U.S.).
- Olivier J. Blanchard & Mitali Das & Hamid Faruqee, 2010. "The Initial Impact of the Crisis on Emerging Market Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 263-323.
- Beatriz Armendáriz & Jonathan Morduch, 2010.
"The Economics of Microfinance, Second Edition,"
MIT Press Books,
The MIT Press,
edition 2, volume 1, number 0262014106, December.
- Esubalew Assefa & Niels Hermes & Aljar Meesters, 2013. "Competition and the performance of microfinance institutions," Applied Financial Economics, Taylor & Francis Journals, vol. 23(9), pages 767-782, May.
- Charlotte Wagner, 2012. "From Boom to Bust: How Different Has Microfinance Been from Traditional Banking?," Development Policy Review, Overseas Development Institute, vol. 30(2), pages 187-210, 03.
- Imai, Katsushi S. & Gaiha, Raghav & Thapa, Ganesh & Annim, Samuel Kobina, 2012.
"Microfinance and Poverty—A Macro Perspective,"
Elsevier, vol. 40(8), pages 1675-1689.
- Katsushi S. Imai & Raghav Gaiha & Ganesh Thapa & Samuel Kobina Annim, 2010. "Microfinance and Poverty -A Macro Perspective," Discussion Paper Series DP2010-33, Research Institute for Economics & Business Administration, Kobe University.
- Katsushi S. Imai & Ganesh Thapa & Samuel Kobina Annim, 2010. "Microfinance and Poverty -A Macro Perspective," Discussion Paper Series DP2010-30, Research Institute for Economics & Business Administration, Kobe University.
- Katsushi Imai & Raghav Gaiha & Ganesh Thapa & Samuel Kobina Annim, 2010. "Microfinance and Poverty A Macro Perspective," The School of Economics Discussion Paper Series 1020, Economics, The University of Manchester.
- Nicolas Krauss & Ingo Walter, 2009. "Can Microfinance Reduce Portfolio Volatility?," Economic Development and Cultural Change, University of Chicago Press, vol. 58(1), pages 85-110, October.
- Deniz Igan & Marcelo Pinheiro, 2011. "Credit Growth and Bank Soundness," IMF Working Papers 11/278, International Monetary Fund.
- Michael P. Dooley & Michael M. Hutchison, 2009.
"Transmission of the U.S. Subprime Crisis to Emerging Markets: Evidence on the Decoupling-Recoupling Hypothesis,"
NBER Working Papers
15120, National Bureau of Economic Research, Inc.
- Dooley, Michael & Hutchison, Michael, 2009. "Transmission of the U.S. subprime crisis to emerging markets: Evidence on the decoupling-recoupling hypothesis," Journal of International Money and Finance, Elsevier, vol. 28(8), pages 1331-1349, December.
- Jimenez Porras, G. & Ongena, S. & Peydro, J.L. & Saurina, J., 2012. "Credit Supply versus Demand: Bank and Firm Balance-Sheet Channels in Good and Crisis Times," Discussion Paper 2012-005, Tilburg University, Center for Economic Research.
- Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
- Vahram Stepanyan & Kai Guo, 2011. "Determinants of Bank Credit in Emerging Market Economies," IMF Working Papers 11/51, International Monetary Fund.
- Jeremy C. Stein & Anil K. Kashyap, 2000. "What Do a Million Observations on Banks Say about the Transmission of Monetary Policy?," American Economic Review, American Economic Association, vol. 90(3), pages 407-428, June.
- Moritz Schularick & Alan M. Taylor, 2009.
"Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870–2008,"
NBER Working Papers
15512, National Bureau of Economic Research, Inc.
- Moritz Schularick & Alan M. Taylor, 2012. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008," American Economic Review, American Economic Association, vol. 102(2), pages 1029-61, April.
- Schularick, Moritz & Taylor, Alan M., 2009. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises, 1870-2008," CEPR Discussion Papers 7570, C.E.P.R. Discussion Papers.
- Maros Ivanic & Will Martin, 2008. "Implications of higher global food prices for poverty in low-income countries-super-1," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 405-416, November.
- Mersland, Roy & Strøm, R. Øystein, 2010. "Microfinance Mission Drift?," World Development, Elsevier, vol. 38(1), pages 28-36, January.
- Aaron Tornell & Frank Westermann, 2002.
"Boom-Bust Cycles in Middle Income Countries: Facts and Explanation,"
CESifo Working Paper Series
755, CESifo Group Munich.
- Aaron Tornell & Frank Westermann, 2002. "Boom-Bust Cycles in Middle Income Countries: Facts and Explanation," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 111-155.
- Aaron Tornell & Frank Westermann, 2002. "Boom-Bust Cycles in Middle Income Countries: Facts and Explanation," NBER Working Papers 9219, National Bureau of Economic Research, Inc.
- Gabriel Di Bella, 2011. "The Impact of the Global Financial Crisison Microfinance and Policy Implications," IMF Working Papers 11/175, International Monetary Fund.
- Behr, Patrick & Entzian, Annekathrin & Güttler, Andre, 2011. "How do lending relationships affect access to credit and loan conditions in microlending?," Journal of Banking & Finance, Elsevier, vol. 35(8), pages 2169-2178, August.
- Galema, Rients & Lensink, Robert & Spierdijk, Laura, 2011. "International diversification and Microfinance," Journal of International Money and Finance, Elsevier, vol. 30(3), pages 507-515, April.
- Robert Cull & Asli Demirgüç-Kunt & Jonathan Morduch, 2009.
"Microfinance Meets the Market,"
Journal of Economic Perspectives,
American Economic Association, vol. 23(1), pages 167-92, Winter.
- Cihak, Martin & Demirguc-Kunt, Asli & Feyen, Erik & Levine, Ross, 2012. "Benchmarking financial systems around the world," Policy Research Working Paper Series 6175, The World Bank.
- Aggarwal, Reena & Demirgüç-Kunt, Asli & Pería, Maria Soledad Martínez, 2011. "Do remittances promote financial development?," Journal of Development Economics, Elsevier, vol. 96(2), pages 255-264, November.
- Peter Dittus & Michael Klein, 2011. "On harnessing the potential of financial inclusion," BIS Working Papers 347, Bank for International Settlements.
- Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
- Morris Goldstein & Daniel Xie, 2009.
"The Impact of the Financial Crisis on Emerging Asia,"
Working Paper Series
WP09-11, Peterson Institute for International Economics.
- Goldstein, Morris & Xie, Daniel, 2009. "The impact of the financial crisis on emerging Asia," Proceedings, Federal Reserve Bank of San Francisco, issue Oct, pages 27-80.
- Hernandez, Emilio & Sam, Abdoul G. & Gonzalez-Vega, Claudio & Chen, Joyce J., 2009. "Impact of Conditional Cash Transfers and Remittances on Credit Market Outcomes in Rural Nicaragua," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49319, Agricultural and Applied Economics Association.
- Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.
If references are entirely missing, you can add them using this form.