Do migrants’ deposits reduce microfinance institutions’ liquidity risk?
This paper is devoted to the analysis of liquidity risk in microfinance. Using a re-sampling method, we estimate withdrawal rate distributions for migrants’ and locals’ deposits, using an original database of 7,828 deposit contracts issued between 2002 and 2008 by 12 village banks belonging to a major Malian rural microfinance network (PASECA-Kayes). Results show that migrants tend more than locals to default on their deposit contracts. The deposits at risk are also higher when considering migrants’ time deposits compared to locals’ deposits. The liquidity risk associated to migrants’ deposits is then higher compared to locals’ deposits. The article gives an insight on the opportunity migrants’ money (including remittances) could represent for the microfinance industry as a source of stable medium- and long-term funds. Latest update: http://www.solvay.edu/sites/upload/files/CEB_WorkingPapers/LastUpdate/wp11017.pdf
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- Ritha Sukadi Mata, 2009. "Microfinance Institutions (MFIs) on the Remittances Market: Money Transfer Activity and Savings Mobilisation," Working Papers CEB 09-022.RS, ULB -- Universite Libre de Bruxelles.
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