IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Do regulated microfinance institutions achieve better sustainability and outreach? Cross-country evidence

  • Valentina Hartarska
  • Denis Nadolnyak
Registered author(s):

    In spite of increasing pressure on microfinance institutions (MFIs) operating in developing countries to transform into regulated financial intermediaries, to date, no study has investigated whether regulated MFIs actually achieve better financial results and reach more poor clients than nonregulated MFIs. This article explores the impact of regulation on MFI performance using newly released data for 114 MFIs from 62 countries in an empirical model where performance is specified as a function of MFI-specific, regulatory, macroeconomic and institutional variables. Consistent with recent cross-country evidence on the impact of banking regulations on bank performance (Barth et al., 2004), this article finds that regulatory involvement does not directly affect performance either in terms of operational self-sustainability or outreach. The article also finds that less leveraged MFIs have better sustainability. The policy implication is that MFIs' transformation into regulated financial institutions is may not lead to improved financial results and outreach. However, the finding that MFIs collecting savings reach more borrowers suggests that there may be indirect benefits from regulation, if regulation is the only way for MFIs to access savings.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840500461840
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 39 (2007)
    Issue (Month): 10 ()
    Pages: 1207-1222

    as
    in new window

    Handle: RePEc:taf:applec:v:39:y:2007:i:10:p:1207-1222
    Contact details of provider: Web page: http://www.tandfonline.com/RAEC20

    Order Information: Web: http://www.tandfonline.com/pricing/journal/RAEC20

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:39:y:2007:i:10:p:1207-1222. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.