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Microfinance Performance and Informal Institutions: A Cross-country Analysis

Luminita Postelnicu and Niels Hermes ()

No 15-032, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper investigates the relationship between the extent to which informal institutions are developed at the country-level and the financial and social performance of MFIs, using data from institutions active in 100 countries. Based on the theoretical literature discussing the economic role of informal institutions such as trust, beliefs, norms and values we hypothesize that microfinance is more successful, both in terms of their financial and social aims, in countries with stronger informal institutions. We test this hypothesis using various direct and indirect measures of informal institutions and link them to measures of financial and social performance of MFIs. Our empirical results are generally supportive to our hypothesis.

Keywords: Microfinance; social capital; trust; norms; values; culture; financial performance; social performance (search for similar items in EconPapers)
Pages: 57 p.
Date: 2015-08-20
New Economics Papers: this item is included in nep-ger, nep-mfd and nep-soc
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