Determinants of Performance of Microfinance Institutions: Cross Country Analysis

Fahana Ferdousi

International Journal of Financial Economics, 2013, vol. 1, issue 4, 143-151

Abstract: This study investigates the effect of both financial sector development and the macroeconomic development on the performance of microfinance institutions (MFIs). The study uses random effect model as an analytical framework and the findings indicate that MFI’s outreach are increased where formal financial system is less developed but to be profitable or to maintain a certain level of standard, minimum financial development is expected. Similar with financial sector development, MFIs also flourish where macro economy is less developed. But such situations are weakly associated with profitability. This study suggests that better macro economy and improved financial system could utilize resources more efficiently and thus leads to more returns on assets with a view to enhance MFIs performance.

Keywords: Microfinance; financial sector development; macroeconomic development; microfinance institutions’ performance (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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