Rating in Microfinance: Cross-Country Evidence

Valentina M. Hartarska

No 25506, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists

Abstract: This paper studies whether microfinance rating agencies were able to impose market discipline on microfinance institutions (MFIs) during the period 1998-2002. Results indicate that not all rating agencies had equal impact. While some rating agencies were able to promote better sustainability, there is some weak evidence that rating by a particular rater might have induce moral hazard, whereby after receiving good rating, MFIs had worse performance perhaps because in some regions several raters operated simultaneously. Evidence also suggests that subsidized rating does not encourage improvements in sustainability and has negative impact on outreach. Rating by some individual raters helped MFIs to raise additional funds.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 36
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae06:25506

DOI: 10.22004/ag.econ.25506

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