Financial Sustainability and Poverty Outreach: The Case of Microfinance Institutions in Eastern Europe and Central Asia

Ganna Sheremenko, Cesar Escalante () and Wojciech J Florkowski
Additional contact information
Ganna Sheremenko: The University of Georgia
Wojciech J Florkowski: The University of Georgia

The European Journal of Development Research, 2017, vol. 29, issue 1, No 14, 230-245

Abstract: Abstract The collapse of state ownership, following the dissolution of the Soviet Union, launched a new era of self-employment and small businesses in need of financing services throughout the region. This research investigates whether the traditional microfinance lending paradigm that adopts a two-pronged mission of financial sustainability and poverty outreach applies to young commercialized microfinance institutions in Eastern Europe and Central Asia. The analysis employs a residual standard error approach to ordinary least squares and 2-stage least squares estimation, as well as recursive model estimation. The results suggest that financial sustainability can be adversely affected when interest rates exceed a threshold of 80 per cent and an individualized instead of group lending approach is adopted. However, poverty outreach is improved by servicing small loans to more borrowers, particularly women.

Keywords: microfinance; Eastern Europe and Central Asia; 2SLS; recursive model; financial sustainability; poverty outreach (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://link.springer.com/10.1057/ejdr.2016.12 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:eurjdr:v:29:y:2017:i:1:d:10.1057_ejdr.2016.12

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/41287/PS2

DOI: 10.1057/ejdr.2016.12

Access Statistics for this article

The European Journal of Development Research is currently edited by Spencer Henson and Natalia Lorenzoni

More articles in The European Journal of Development Research from Palgrave Macmillan, European Association of Development Research and Training Institutes (EADI) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().