Performance of Microfinance Institutions: A Macroeconomic and Institutional Perspective
AbstractUnder the continued effects of global financial crisis where the donor's investment in microfinance sectors has become shrunk, how the macroeconomic factors or the crisis or the macro-institutional factors would affect the performance of microfinance institutions (MFIs) have become one of the key debates among the policy makers and practitioners. The present paper has investigated the effect of both institutional factors and the macro economy on the financial performance of MFIs drawing upon the Microfinance Information Exchange (MIX) data as well as cross-country data of macro economy, finance and institutions drawing upon three stage least squares (3SLS) and fixed effects vector decomposition (FEVD) to take account of the endogeneity of key explanatory variables. In contrast to Ahlin et al.'s (2010), we generally find that institutional factors affect MFIs' financial performance, in particular, profitability, operating expense, and portfolio quality. It is also found that the macro-economic and financial factors, such as GDP and share of domestic credit to GDP, have positive impacts on MFIs' financial performance, such as profitability, operating expense ratio and portfolio quality. It is thus concluded that while macroeconomic factors are important, improving macro-institutional factors, policies to raise country-level institutional qualities are required for making the activities of MFIs more sustainable under the global recession.
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 InfoPaper provided by Economics, The University of Manchester in its series The School of Economics Discussion Paper Series with number 1116.
Date of creation: 2011
Date of revision:
Contact details of provider:
Postal: Manchester M13 9PL
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.socialsciences.manchester.ac.uk/disciplines/economics/
More information through EDIRC
Other versions of this item:
- Katsushi S. Imai & Raghav Gaiha & Ganesh Thapa & Samuel Kobina Annim & Aditi Gupta, 2011. "Performance of Microfinance Institutions-A Macroeconomic and Institutional Perspective," Discussion Paper Series DP2011-22, Research Institute for Economics & Business Administration, Kobe University.
- NEP-ALL-2011-08-29 (All new papers)
- NEP-BAN-2011-08-29 (Banking)
- NEP-HME-2011-08-29 (Heterodox Microeconomics)
- NEP-MAC-2011-08-29 (Macroeconomics)
- NEP-MFD-2011-08-29 (Microfinance)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marianne Sensier).
If references are entirely missing, you can add them using this form.