The macroeconomy and microfinance outreach: a panel data analysis

Sefa Awaworyi Churchill

Applied Economics, 2019, vol. 51, issue 21, 2266-2274

Abstract: This study examines the effects of macroeconomic and institutional factors on microfinance institution (MFI) outreach. To capture the performance of the macroeconomy, we include proxies for institutional quality, economic growth, FDI inflow, unemployment rate, inflation and the prevalence of wage-earning jobs. Further, we examine effects on outreach along the dimensions of outreach depth and outreach breadth. Using data on 1526 MFIs from 99 countries over the period 2000 to 2015, our results suggest that environments characterised by high levels of economic performance and good institutions tend to hinder outreach performance. These results suggest that MFIs depend on a poor economy to thrive given the informal nature of microfinance.

Date: 2019
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DOI: 10.1080/00036846.2018.1540857

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