Banks and Microbanks

Robert Cull, Asli Demirguc-Kunt and Jonathan Morduch

Journal of Financial Services Research, 2014, vol. 46, issue 1, 53 pages

Abstract: We combine two datasets to examine whether the presence of banks affects the profitability and outreach of microfinance institutions. We find evidence that competition matters. Greater bank penetration in the overall economy is associated with microbanks pushing toward poorer markets, as reflected in smaller average loans sizes and greater outreach to women. The evidence is particularly strong for microbanks relying on commercial-funding and using traditional bilateral lending contracts (rather than group lending methods favored by microfinance NGOs). We consider plausible alternative explanations for the correlations, including relationships that run through the nature of the regulatory environment and the structure of the banking environment, but we fail to find strong support for these alternative hypotheses. Copyright Springer Science+Business Media New York 2014

Keywords: Banks; Depository institutions; Micro finance institutions; Mortgages; G21 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (35)

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Related works:
Working Paper: Banks and Microbanks (2013)
Working Paper: Banks and microbanks (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jfsres:v:46:y:2014:i:1:p:1-53

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DOI: 10.1007/s10693-013-0177-z

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