IDEAS home Printed from https://ideas.repec.org/a/wly/jintdv/v33y2021i7p1087-1111.html
   My bibliography  Save this article

From the top to the bottom: The global environment and microfinance institution (MFI) performance in the West African Economic and Monetary Union countries

Author

Listed:
  • Tchapo Gbandi
  • Mawuli K. Couchoro
  • Mawulolo J. Agossou

Abstract

This paper highlights the effects of macroeconomic and macroinstitutional environments on the performance of microfinance institutions (MFIs) in the West African Economic and Monetary Union (WAEMU) countries. The quality of this relationship can help MFIs to succeed, as well as adequate policies. This analysis is conducted using panel data spanning the period 2004–2014. We find that economic performance goes hand in hand with MFIs' sustainability in WAEMU countries. By contrast, improved macroinstitutional conditions result in a decrease in MFIs financial performance. Last but not least, MFIs reach out significantly more to the poorest when countries' institutions are improving.

Suggested Citation

  • Tchapo Gbandi & Mawuli K. Couchoro & Mawulolo J. Agossou, 2021. "From the top to the bottom: The global environment and microfinance institution (MFI) performance in the West African Economic and Monetary Union countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(7), pages 1087-1111, October.
    • Handle: RePEc:wly:jintdv:v:33:y:2021:i:7:p:1087-1111
    DOI: 10.1002/jid.3566
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/jid.3566
    Download Restriction: no
    File URL: https://libkey.io/10.1002/jid.3566?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zamore, Stephen, 2018. "Should microfinance institutions diversify or focus? A global analysis," Research in International Business and Finance, Elsevier, vol. 46(C), pages 105-119.
    2. Demirguc, Asli & Huizinga, Harry, 1999. "Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence," The World Bank Economic Review, World Bank, vol. 13(2), pages 379-408, May.
    3. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    4. 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.
    5. Hartarska, Valentina, 2005. "Governance and performance of microfinance institutions in Central and Eastern Europe and the Newly Independent States," World Development, Elsevier, vol. 33(10), pages 1627-1643, October.
    6. Ayi Gavriel Ayayi & Maty Sene, 2010. "What drives microfinance institution's financial sustainability," Journal of Developing Areas, Tennessee State University, College of Business, vol. 44(1), pages 303-324, September.
    7. Mersland, Roy & Strøm, R. Øystein, 2010. "Microfinance Mission Drift?," World Development, Elsevier, vol. 38(1), pages 28-36, January.
    8. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    9. François Fall, 2009. "Panorama de la relation banques/institutions de microfinance à travers le monde," Post-Print hal-01566385, HAL.
    10. Sandrine Kablan, 2012. "Efficacite Des Institutions De Microfinance En Uemoa : Une Approche Outreach-Intermediation Financiere," Working Papers halshs-00710206, HAL.
    11. Mark Schreiner, 2002. "Aspects of outreach: a framework for discussion of the social benefits of microfinance," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(5), pages 591-603.
    12. M. Hashem Pesaran & Qiankun Zhou, 2018. "Estimation of time-invariant effects in static panel data models," Econometric Reviews, Taylor & Francis Journals, vol. 37(10), pages 1137-1171, November.
    13. Annabel Vanroose, 2008. "Which macro factors make microfinance institutions reach out?," ULB Institutional Repository 2013/174948, ULB -- Universite Libre de Bruxelles.
    14. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    15. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    16. Baltagi, Badi H. & Demetriades, Panicos O. & Law, Siong Hook, 2009. "Financial development and openness: Evidence from panel data," Journal of Development Economics, Elsevier, vol. 89(2), pages 285-296, July.
    17. François Facchini, 2007. "Entrepreneur et croissance économique : développements récents," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00433083, HAL.
    18. Lee, Alexander & Schultz, Kenneth A., 2012. "Comparing British and French Colonial Legacies: A Discontinuity Analysis of Cameroon," Quarterly Journal of Political Science, now publishers, vol. 7(4), pages 365-410, October.
    19. Hubert Tchakoute Tchuigoua & Mehdi Nekhili, 2012. "Gestion des risques et performance des institutions de microfinance," Revue d'économie industrielle, De Boeck Université, vol. 0(2), pages 127-148.
    20. Mawuli K. Couchoro & Tchapo Gbandi, 2018. "Microfinance et pauvreté multidimensionnelle dans la Communauté économique des États de l’Afrique de l’Ouest (CEDEAO) : une perspective macro-économique," Mondes en développement, De Boeck Université, vol. 0(1), pages 147-164.
    21. Katsushi Imai & Raghav Gaiha & Ganesh Thapa, 2010. "Is the Millennium Development Goal on Poverty Still Achievable? The Role of Institutions, Finance and Openness," Oxford Development Studies, Taylor & Francis Journals, vol. 38(3), pages 309-337.
    22. François Facchini, 2007. "Entrepreneur et croissance économique : développements récents," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00270436, HAL.
    23. Philippe ADAIR & Imène BERGUIGA, 2010. "Les Facteurs Déterminants De La Performance Sociale Et De La Performance Financière Des Institutions De Microfinance Dans La Région Mena : Une Analyse En Coupe Instantanée," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 32, pages 91-120.
    24. Lansana Bangoura & Momar Khary Mbow & Albert Lessoua & Diadié Diaw, 2016. "Impact of Microfinance on Poverty and Inequality A Heterogeneous Panel Causality Analysis," Revue d'économie politique, Dalloz, vol. 126(5), pages 789-818.
    25. Dominique Gentil & Jean-Michel Servet, 2002. "Microfinance : petites sommes, grands effets ? Introduction," Revue Tiers Monde, Programme National Persée, vol. 43(172), pages 729-735.
    26. Decker, Stephanie & Estrin, Saul & Mickiewicz, Tomasz, 2020. "The tangled historical roots of entrepreneurial growth aspirations," LSE Research Online Documents on Economics 102989, London School of Economics and Political Science, LSE Library.
    27. Donou-Adonsou, Ficawoyi & Sylwester, Kevin, 2017. "Growth effect of banks and microfinance: Evidence from developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 44-56.
    28. Hartarska, Valentina M., 2005. "Governance and Performance of Microfinance Institutions in Central and Eastern Europe and the Newly Independent States," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24568, European Association of Agricultural Economists.
    29. Charles Ficawoyi Donou-Adonsou & Kevin Sylwester, 2015. "Macroeconomic Effects of Microfinance: Evidence from Developing Countries," Journal of Economic Insight, Missouri Valley Economic Association, vol. 41(1), pages 21-35.
    30. David Fehr & Gaamaa Hishigsuren, 2006. "Raising Capital For Microfinance: Sources Of Funding And Opportunities For Equity Financing," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 11(02), pages 133-143.
    31. 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.
    32. François Fall, 2011. "La complémentarité banque/microfinance dans les économies en développement : une perspective théorique [The complementary between bank and microfinance in developing economies: a theoretical perspe," Post-Print hal-01566381, HAL.
    33. Annabel Vanroose, 2008. "What macro factors make microfinance institutions reach out?," Working Papers CEB 08-036.RS, ULB -- Universite Libre de Bruxelles.
    34. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    35. Sydney Chikalipah, 2017. "Institutional Environment and Microfinance Performance in Sub-Saharan Africa," African Development Review, African Development Bank, vol. 29(1), pages 16-27, March.
    36. Koffi Sodokin & Charles Donou-Adonsou, 2010. "Banks, Microfinance Institutions and Economic Growth in the West African Economic and Monetary Union," African Development Review, African Development Bank, vol. 22(4), pages 495-510.
    37. Mersland, Roy & Øystein Strøm, R., 2009. "Performance and governance in microfinance institutions," Journal of Banking & Finance, Elsevier, vol. 33(4), pages 662-669, April.
    38. Raihan, Selim & Osmani, S.R. & Khalily, M.A. Baqui, 2017. "The macro impact of microfinance in Bangladesh: A CGE analysis," Economic Modelling, Elsevier, vol. 62(C), pages 1-15.
    39. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    40. Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-896, September.
    41. François-Seck Fall, 2009. "Panorama de la relation Banques et Institutions de microfinance à travers le monde," Post-Print halshs-00844530, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kuessi, Richard & Nantob, N'Yilimon & Aguey, Segnon & Couchoro, Mawuli Kodjovi, 2023. "Competition and banking efficiency in the WAEMU: The role of multinationals and institutions," International Economics, Elsevier, vol. 175(C), pages 45-62.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gutiérrez-Nieto, Begoña & Serrano-Cinca, Carlos, 2019. "20 years of research in microfinance: An information management approach," International Journal of Information Management, Elsevier, vol. 47(C), pages 183-197.
    2. Niels Hermes & Marek Hudon, 2018. "Determinants Of The Performance Of Microfinance Institutions: A Systematic Review," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1483-1513, December.
    3. Barry, Thierno Amadou & Tacneng, Ruth, 2014. "The Impact of Governance and Institutional Quality on MFI Outreach and Financial Performance in Sub-Saharan Africa," World Development, Elsevier, vol. 58(C), pages 1-20.
    4. Nargiza Maksudova, 2010. "Macroeconomics of Microfinance: How Do the Channels Work?," CERGE-EI Working Papers wp423, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    5. Hermes, Cornelis & Hudon, M., 2018. "Determinants of the Performance of Microfinance Institutions: A Systematic Review," Research Report 2018008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    6. Janda, Karel & Zetek, Pavel, 2014. "Mikrofinanční Revoluce: Aktuální Kontroverze A Výzvy [Microfinance Revolution: Recent Controversies And Challenges]," MPRA Paper 54098, University Library of Munich, Germany.
    7. Hossain, Shahadat & Galbreath, Jeremy & Hasan, Mostafa Monzur & Randøy, Trond, 2020. "Does competition enhance the double-bottom-line performance of microfinance institutions?," Journal of Banking & Finance, Elsevier, vol. 113(C).
    8. Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.
    9. Karel Janda & Pavel Zetek, 2015. "Mikrofinanční revoluce: kontroverze a výzvy [Microfinance Revolution: Controversies and Challenges]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(1), pages 108-130.
    10. Mira Nurmakhanova & Gavin Kretzschmar & Hassouna Fedhila, 2015. "Trade-off between financial sustainability and outreach of microfinance institutions," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 231-250, December.
    11. Annabel Vanroose & Bert D’Espallier, 2009. "Microfinance and Financial Sector Development," Working Papers CEB 09-040.RS, ULB -- Universite Libre de Bruxelles.
    12. Fahana Ferdousi, 2013. "Determinants of Performance of Microfinance Institutions: Cross Country Analysis," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 1(4), pages 143-151.
    13. Bibi, Uzma & Balli, Hatice Ozer & Matthews, Claire D. & Tripe, David W.L., 2018. "New approaches to measure the social performance of microfinance institutions (MFIs)," International Review of Economics & Finance, Elsevier, vol. 53(C), pages 88-97.
    14. Hanousek, Jan & Alimukhamedova, Nargiza, 2015. "What Do We Know about Microfinance at Macro Glance?," CEPR Discussion Papers 10484, C.E.P.R. Discussion Papers.
    15. Banto, Jean Michel & Monsia, Atokê Fredia, 2021. "Microfinance institutions, banking, growth and transmission channel: A GMM panel data analysis from developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 126-150.
    16. Simon Zaby, 2019. "Science Mapping of the Global Knowledge Base on Microfinance: Influential Authors and Documents, 1989–2019," Sustainability, MDPI, vol. 11(14), pages 1-21, July.
    17. Daniele TUEDEM WAFFO & Jules Roger FEUDJO & dagobert NGONGANG, 2016. "Mécanismes de gestion du risque de crédit ex ante et performance globale des EMF camerounais," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 7(2), pages 53-69, November.
    18. Simon Cornée & Gervais Thenet, 2016. "Efficience des institutions de microfinance en Bolivie et au Pérou:une approche data envelopment analysis en deux étapes," Revue Finance Contrôle Stratégie, revues.org, vol. 19(1), pages 65-91, March.
    19. Inoue, Takeshi & Hamori, Shigeyuki, 2011. "Financial permeation as a role of microfinance : has microfinance actually been helpful to the poor?," IDE Discussion Papers 299, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    20. Nargiza Alimukhamedova, 2014. "Microfinance Environment in Uzbekistan: Analysis of Supply and Demand," Working Papers 344, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:jintdv:v:33:y:2021:i:7:p:1087-1111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/journal/5102/home .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.