Financial Performance of Microfinance Institutions-A Macroeconomic and Institutional Perspective
AbstractThis study investigates the effect of both institutional factors and the macro economy on the financial performance of MFIs. Drawing upon the Microfinance Information Exchange data and cross-country data on macro economy, finance and institutions, we use three stage least squares and Hausman-Taylor to take account of endogeneity. We find that institutional factors affect MFIs’ financial performance, in particular, profitability, operating expense, and portfolio quality. Also, GDP and share of domestic credit to GDP have positive impacts on MFIs’ financial performance. Hence policies to raise country-level institutional qualities are required for making the activities of MFIs sustainable.
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Bibliographic InfoPaper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2012-04.
Length: 29 pages
Date of creation: Feb 2012
Date of revision:
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Microfinance; Financial Performance; Macro economy and Institutions;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-27 (All new papers)
- NEP-BAN-2012-02-27 (Banking)
- NEP-HME-2012-02-27 (Heterodox Microeconomics)
- NEP-MFD-2012-02-27 (Microfinance)
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