Resilience of Microfinance Institutions to National Macroeconomic Events: An Econometric Analysis of MFI asset quality
AbstractAfter controlling for MFI and country characteristics, we find no evidence suggesting a strong (in magnitude) and statistically significant relationship between changes in GNI per capita (GROWTH) and four indicators of MFI portfolio risk: quality at Risk over 30 Days (PAR-30), Portfolio at Risk over 90 Days (PAR-90), Loan loss Rate (LLR), and Write-off Ratio (WOR). We test the robustness of the models with different specifications that confirm the general result and test for different impact from growth rates according to average loan sizes disbursed by MFIs. These tests suggest that microfinance portfolios have high resilience to economic shocks. Specifically, we found only a significant relationship between growth and PAR-30. We also control for other explanatory variables like size, age, average loan size, and productivity.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 4317.
Date of creation: Jul 2007
Date of revision:
Microfinace; Assets Quality; Systemic Shocks; Repayment; Resilience;
Find related papers by JEL classification:
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-08 (All new papers)
- NEP-MAC-2007-08-08 (Macroeconomics)
- NEP-MFD-2007-08-08 (Microfinance)
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