Refinancing MFIs with Market Power: Theory and Evidence

Lutz Arnold (), Benedikt Booker, Gregor Dorfleitner and Michaela Röhe

No 162, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This paper presents a model of the complete microcredit financing chain investor MIV → MFI → micro-borrower, in which social-minded MIVs provide funds only to those MFIs which do not exploit their bargaining power towards micro-borrowers. The MFIs with the highest bargaining power do not use MIV capital, since eschewing their market power is most costly for them. Consistent with this prediction of the theoretical model, we find empirically that the net interest margin, as a measure of MFI market power, negatively affects the likelihood of using MIV finance. This lends support to the view that social criteria play an effective role in MIVs’ investment policies, thereby also impacting MFIs’ lending behavior.

Keywords: microfinance; microfinance investment vehicles; social returns (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-01
New Economics Papers: this item is included in nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://bgpe.cms.rrze.uni-erlangen.de/files/2023/0 ... ory-and-Evidence.pdf First version, 2016 (application/pdf)

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:bav:wpaper:162_arnoldbookerdorfleitnerroehe

Access Statistics for this paper

More papers in Working Papers from Bavarian Graduate Program in Economics (BGPE) Contact information at EDIRC.
Bibliographic data for series maintained by Anton Barabasch ().