Microfinance institutions: financial sustainability and efficiency

Francesco Guidi and Ana Marr

No 7415, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: The main objective of this research is to analyse the relationship between financial sustainability and efficiency of Microfinance Institutions (MFIs) in terms of outreach to the poor as well as the relation between gender and repayment in microfinance. The sample used is composed of all MFIs in the globe as reported to MixMarket. Our study covers the period 2000-2010. The study also investigates whether the current global financial crisis has had any effects on the issues we study. Our dataset is organised as a panel dataset given that we have multiple observations on the same economic units and a number of periods over time. The estimation techniques are based on the fixed-effects (FE) and random-effects (RE) models. However we use the Hausman test in order to make a choice between FE and RE approaches. Our results show that FE models perform better that RE models through all the period of analysis. For the whole period of analysis results show that MFIs focusing on female clients, are characterized by a greater size of loans provided. On the other hand, we also find that the credit risk in microfinance institutions increases as the number of female clients raise.

Keywords: microfinance; financial sustainability; efficiency; global financial crisis (search for similar items in EconPapers)
Date: 2012-01-31
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http://gala.gre.ac.uk/id/eprint/7415/1/Guidi-%26-Marr-MicrofinanceSustEffic.pdf

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