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Global insights on wage and employee turnover in microfinance

Author

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  • Al-Azzam, Moh'd
  • Obeidat, Shatha M.

Abstract

Microfinance institutions (MFIs) face high operating costs partially due to employee turnover while striving to balance financial sustainability with their social mission. This study examines the relationship between wages and employee turnover, using data from 979 MFIs in 95 developing countries from 2010 to 2018. Utilizing two instrumental variables for wage and various estimation techniques, we find a nuanced relationship: higher wages initially reduce employee turnover and enhance employment stability. Beyond a certain threshold, increased wages lead to higher turnover and instability. Additionally, employee turnover is lower for non-profit MFIs, while MFIs in wealthier economies experience higher turnover.

Suggested Citation

  • Al-Azzam, Moh'd & Obeidat, Shatha M., 2025. "Global insights on wage and employee turnover in microfinance," International Review of Economics & Finance, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:reveco:v:100:y:2025:i:c:s1059056025002801
    DOI: 10.1016/j.iref.2025.104117
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    More about this item

    Keywords

    Wage; Labor markets; Employee turnover; Microfinance; Poverty;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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