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Resilience of Microfinance Institutions to National Macroeconomic Events: An Econometric Analysis of MFI asset quality

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Author Info
Gonzalez, Adrian

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Abstract

After 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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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4317.

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Date of creation: Jul 2007
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Handle: RePEc:pra:mprapa:4317

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Related research
Keywords: Microfinace; Assets Quality; Systemic Shocks; Repayment; Resilience;

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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

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References listed on IDEAS
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.:
  1. Dean Karlan & Xavier Giné, 2007. "Group Versus Individual Liability: A Field Experiment in the Philippines," Working Papers 111, Center for Global Development. [Downloadable!]
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  2. Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, December.
  3. Cull, Robert & Demirguc-Kunt, Asli & Morduch, Jonathan, 2006. "Financial performance and outreach : a global analysis of leading microbanks," Policy Research Working Paper Series 3827, The World Bank. [Downloadable!]
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