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What macro factors make microfinance institutions reach out?

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Author Info

  • Annabel Vanroose

Abstract

This paper identifies factors that explain why microfinance institutions are reaching more clients in some countries than in others. To that end, the paper applies a cross-country analysis on a unique dataset covering 115 countries. Results indicate that the microfinance sector is more present in the richer countries of the developing world. It also reaches more clients in countries that receive more international support. Population density plays also a positive role, which could explain why the sector is still underdeveloped in rural areas. The level of industrialisation and inflation do not seem to influence microfinance outreach, while regional dummies do.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 08-036.RS.

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Length: 26 p.
Date of creation: Oct 2008
Date of revision:
Publication status: Published by: Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB)
Handle: RePEc:sol:wpaper:08-036

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Keywords: microfinance; financial sector development; aid; developing world;

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References

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  1. Daniel Traca, 2011. "On the Efficiency Effects of Subsidies in Microfinance: An Empirical Inquiry," ULB Institutional Repository 2013/89989, ULB -- Universite Libre de Bruxelles.
  2. Marc Labie & Anaïs Périlleux, 2008. "Corporate governance in microfinance: credit unions," Working Papers CEB 08-003.RS, ULB -- Universite Libre de Bruxelles.
  3. Beck, H.T.L. & Demirgüç-Kunt , A. & Peria, M.M, 2007. "Reaching out: Access to and use of banking services across countries," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125425, Tilburg University.
  4. 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.
  5. Honohan, Patrick, 2005. "Measuring microfinance access : building on existing cross-country data," Policy Research Working Paper Series 3606, The World Bank.
  6. 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.
  7. Hollis, Aidan & Sweetman, Arthur, 1998. "Microcredit: What can we learn from the past?," World Development, Elsevier, vol. 26(10), pages 1875-1891, October.
  8. Seibel, Hans Dieter, 2003. "History matters in microfinance," Working Papers 2003,5, University of Cologne, Development Research Center.
  9. Ghatak, M. & Guinnane, T.W., 1998. "The Economics of Lending with Joint Liability: Theory and Practice," Papers 791, Yale - Economic Growth Center.
  10. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2000. "The Role of Social Capital in Financial Development," CRSP working papers 511, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  11. Timothy W. Guinnane, 2005. "Regional Banks for Micro-Credit Institutions: Centrals in," 2005 Meeting Papers 74, Society for Economic Dynamics.
  12. Annabel Vanroose, 2007. "Microfinance and its macro-environment," ULB Institutional Repository 2013/14333, ULB -- Universite Libre de Bruxelles.
  13. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
  14. Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, January.
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Citations

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Cited by:
  1. Nargiza Maksudova, 2010. "Macroeconomics of Microfinance: How Do the Channels Work?," CERGE-EI Working Papers wp423, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. Marek Hudon, 2010. "Management of microfinance institutions: Do subsidies matter?," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(7), pages 890-905.
  3. Alfiah Hasanah & Arief Anshory Yusuf, 2013. "Determinants of the Establishment of Islamic Micro Finance Institutions: The Case of Baitul Maal wa Tamwil (BMT) in Indonesia," Working Papers in Economics and Development Studies (WoPEDS) 201308, Department of Economics, Padjadjaran University, revised Mar 2013.
  4. 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).
  5. Arvind Ashta & Marek Hudon, 2009. "To whom should we be fair? Ethical issues in Balancing Stakeholder Interests from Banco Compartamos Case Study," Working Papers CEB 09-036.RS, ULB -- Universite Libre de Bruxelles.
  6. Annabel Vanroose & Bert D’Espallier, 2009. "Microfinance and Financial Sector Development," Working Papers CEB 09-040.RS, ULB -- Universite Libre de Bruxelles.
  7. Dlamini, Menzie S., 2012. "The effect of subsidies on the performance and sustainability of microfinance institutions in sub-Saharan Africa," Research Theses 134487, Collaborative Masters Program in Agricultural and Applied Economics.

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