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Microfinance and competition for external funding

Author

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  • Ghosh, Suman
  • Van Tassel, Eric

Abstract

In this paper we examine a one-period model in which poverty minimizing microfinance lenders must raise external funding from a profit maximizing investor. Assuming that the lenders vary in their operating costs, we find that competition between lenders for external funds can lead to higher aggregate poverty reduction.

Suggested Citation

  • Ghosh, Suman & Van Tassel, Eric, 2011. "Microfinance and competition for external funding," Economics Letters, Elsevier, vol. 112(2), pages 168-170, August.
  • Handle: RePEc:eee:ecolet:v:112:y:2011:i:2:p:168-170
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    References listed on IDEAS

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    1. Robert Cull & Asli Demirgüç-Kunt & Jonathan Morduch, 2009. "Microfinance Meets the Market," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 167-192, Winter.
    2. Beatriz Armendáriz & Ariane Szafarz, 2011. "On Mission Drift in Microfinance Institutions," World Scientific Book Chapters,in: The Handbook Of Microfinance, chapter 16, pages 341-366 World Scientific Publishing Co. Pte. Ltd..
    3. Rowat, Colin & Seabright, Paul, 2006. "Intermediation by aid agencies," Journal of Development Economics, Elsevier, vol. 79(2), pages 469-491, April.
    4. Anna Fruttero & Varun Gauri, 2005. "The Strategic Choices of NGOs: Location Decisions in Rural Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 759-787.
    5. Aldashev, Gani & Verdier, Thierry, 2010. "Goodwill bazaar: NGO competition and giving to development," Journal of Development Economics, Elsevier, vol. 91(1), pages 48-63, January.
    6. McIntosh, Craig & Wydick, Bruce, 2005. "Competition and microfinance," Journal of Development Economics, Elsevier, vol. 78(2), pages 271-298, December.
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    Citations

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    Cited by:

    1. Bert D'Espallier & Marek Hudon & Ariane Szafarz, 2016. "Aid Volatility and Social Performance in Microfinance," Working Papers CEB 16-015, ULB -- Universite Libre de Bruxelles.
    2. Sara Biancini & David Ettinger & Baptiste Venet, 2017. "Mission Drift in Microcredit and Microfinance Institution Incentives," Working Papers DT/2017/01, DIAL (Développement, Institutions et Mondialisation).
    3. repec:eee:wdevel:v:107:y:2018:i:c:p:176-188 is not listed on IDEAS
    4. Mathurin Founanou & Zaka Ratsimalahelo, 2016. "Regulation of Microfinance Institutions in Developing countries: an incentives theory approach," Working Papers hal-01376900, HAL.
    5. Mathurin FOUNANOU & Zaka RATSIMALAHELO, 2016. "Regulation of Microfinance Institutions in Developing countries: an incentives theory approach," Working Papers 2016-03, CRESE.
    6. Ly, Pierre & Mason, Geri, 2012. "Competition Between Microfinance NGOs: Evidence from Kiva," World Development, Elsevier, vol. 40(3), pages 643-655.
    7. Janda, Karel & Van Tran, Quang & Zetek, Pavel, 2014. "Influence of External Funding on Microfinance Performance," MPRA Paper 58170, University Library of Munich, Germany.
    8. Janda, Karel & Tran, Quang & Zetek, Pavel, 2014. "Vliv externího financování na mikrofinanční rozvoj - makro perspektiva
      [Influence of external funding on microfinance performance - macro perspective]
      ," MPRA Paper 58166, University Library of Munich, Germany.
    9. repec:kap:sbusec:v:49:y:2017:i:2:d:10.1007_s11187-016-9824-8 is not listed on IDEAS

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