Financial Performance of Microfinance Institutions-A Macroeconomic and Institutional Perspective

Katsushi Imai, Raghav Gaiha, Ganesh Thapa, Samuel Annim and Aditi Gupta
Additional contact information
Raghav Gaiha: Faculty of Management Studies, University of Delhi, India
Ganesh Thapa: International Fund for Agricultural Development, Italy
Aditi Gupta: Yes Bank, Mumbai

No DP2012-04, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This study investigates the effect of both institutional factors and the macro economy on the financial performance of MFIs. Drawing upon the Microfinance Information Exchange data and cross-country data on macro economy, finance and institutions, we use three stage least squares and Hausman-Taylor to take account of endogeneity. We find that institutional factors affect MFIs’ financial performance, in particular, profitability, operating expense, and portfolio quality. Also, GDP and share of domestic credit to GDP have positive impacts on MFIs’ financial performance. Hence policies to raise country-level institutional qualities are required for making the activities of MFIs sustainable.

Keywords: Microfinance; Financial Performance; Macro economy and Institutions (search for similar items in EconPapers)
Pages: 29 pages
Date: 2012-02
New Economics Papers: this item is included in nep-ban, nep-hme and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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