Why microfinance institutions go digital: An empirical analysis

Gregor Dorfleitner, Davide Forcella and Quynh Anh Nguyen

No 21-003, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: While the role of digital solutions to foster financial inclusion and the development of the microfinance sector are widely acknowledged, questions concerning the variation in the ability and willingness of microfinance institutions’ (MFIs) adoption of these tools remain unanswered. This paper studies the determinant of the use of digital support solutions in the microfinance sector by using a global sample of MFIs derived from a survey by YAPU Solutions on rural lending and IT solutions. We discover the evidence that suggests the adoption of these tools is consistent with the social performance of MFIs. Furthermore, the results of the study indicate that the profitability of the institutions is associated with a larger application of digital support solutions. Macroeconomic factors, the development of the country in which the institution is located, also impact MFIs’ decisions regarding integrating digital solutions into their services and internal operational processes.

Keywords: Microfinance institutions; Fintech; Digital solutions; Social performance; Digitization (search for similar items in EconPapers)
JEL-codes: G21 O33 (search for similar items in EconPapers)
Date: 2021-03-17
New Economics Papers: this item is included in nep-ban, nep-cwa, nep-dev, nep-fle, nep-ict, nep-mfd and nep-pay
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