Performance and Capital Structure of Microfinance Institutions in Eastern Europe and Central Asia

Khachatryan, Knar; Hartarska, Valentina; Grigoryan, Aleksandr

doi:10.1080/00128775.2017.1336064

Cited by 40 publications

(27 citation statements)

References 34 publications

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“…The various empirical studies demonstrate that there are integration (Saa-Requejo, 1996) or disagreement (De Jong, Verbeek, & Verwijmeren, 2011) between these two theories in explaining the firm capital structures. Reviewing the empirical researches, capital structure research mostly plays the role of explanatory variables (Graham & Leary, 2011) on firm efficiency (Khachatryan, Hartarska, & Grigoryan, 2017;Margaritis & Psillaki, 2007). This research is in the view of composing efficiency of financing decision as a part determining the overall firm efficiency rather than an independent factor.…”

Section: Investment Financing and Dividend Efficiencymentioning

confidence: 99%

Firm performance and ownership structure: Dynamic network data envelopment analysis approach

Kuo

Dinh

2020

Manage Decis Econ

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This paper applies dynamic network slacks-based data envelopment analysis to measure financial performance based on the interrelationship among investment, financing, and dividend decisions. The empirical results show that financial performance is determined simultaneously by the efficiency of decisions, and sample firms have good performance in investment stage, but need to improve their financing and dividend policies. The proposal financial performance measure explains the multicriteria of decision-making rather than the single financial ratios. Besides, the research contributes a novel on the significant relationship between firm's ownership structure in the form of managers, government and foreign shareholders, and the firm's financial performance.

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Section: Investment Financing and Dividend Efficiencymentioning

confidence: 99%

Firm performance and ownership structure: Dynamic network data envelopment analysis approach

Kuo

Dinh

2020

Manage Decis Econ

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“…Capital is measured by the ratio of total equity to total assets. Khachatryan, Hartarska, and Grigoryan () found the capital structure of an MFI to have a positive impact on the institution's performance. The capital structure of an MFI is expected to have a positive correlation with MFIs’ sustainability, breadth of outreach, and depth of outreach.…”

Section: Data and Selection Of Variablesmentioning

confidence: 99%

Regulation, Outreach, and Sustainability of Microfinance Institutions in Sub‐Saharan Africa: A Multilevel Analysis

Nyanzu

Peprah

Ayayi

2019

Journal of Small Business Management

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The paper examines the effect of regulation on microfinance institutions' (MFIs) sustainability and outreach in Sub-Saharan Africa (SSA). Using unbalanced panel data from 2002 to 2012 for 30 countries and a multilevel estimation technique, we find that regulation helps improves the sustainability and breadth of outreach but not the depth. We also find that MFIs that accept deposits have better sustainability but tend to serve the marginal poor. Finally, regulatory quality has a positive impact on outreach and sustainability. Overall, the paper casts new light on the contribution of regulation to the dual objectives of microfinance.

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“…Third, in the propensity score estimation we include MFI capital structure and its elements. A number of studies show that the capital structure affects the performance of MFIs (Bogan, ; Caudill et al., ; Khachatryan et al., ). The capital structure is defined as the share of capital by each source of funds.…”

Section: Methods and Datamentioning

confidence: 99%

“…For instance, Caudill, Gropper, and Hartarska () show that subsidy‐dependent MFIs are less efficient over time in contrast to MFIs using savings as loanable funds, while Caudill, Gropper, and Hartarska () argue that subsidies are associated with higher costs. Focusing on the ECA region Khachatryan, Hartarska and Grigoryan () assess the link between MFI capital structure and performance and find that subsidies have an ambiguous effect on financial performance but argue that lack of subsidies may entail socially harmful consequences. Given our detailed data on subsidies, we are able to control for the efficiency of subsidized and unsubsidized MFIs when diversifying their product portfolio and offering loan services together with savings.…”

Section: Relevant Literaturementioning

confidence: 99%

Is the model “loans‐plus‐savings” better for microfinance in Eastern Europe and Central Asia? A propensity score matching comparison

Khachatryan

Baghdasaryan

Hartarska

2019

Review Development Economics

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Microfinance institutions are gradually evolving into multiservice organizations offering not only loans but also savings, and other financial and nonfinancial services. We contribute to the literature aimed at identifying how combining credit with savings affects outreach and sustainability in microfinance institutions (MFIs). We apply the propensity score matching method as well as its augmented dose-response version to compare the performance of loans-plus-savings MFIs with that of lending-only in a sample of 710 observations from Eastern Europe and Central Asia. Owing to our unique capital structure data, we control for the use of subsidized capital, which related work ignores while existing evidence points to tradeoffs between subsidies and savings. We find that financial performance and breadth of outreach are positively associated with savings mobilization, while the evidence on depth of outreach points to a possible mission drift. J E L C L A S S I F I C A T I O NG21, F30, O16 K E Y W O R D S economies of scope, Microfinance institutions, performance, propensity score matching, savings | 1311 KHACHATRYAN eT Al.Szafarz, 2011), which creates new forms of exclusion, this question is important for policymakers, practitioners, and scholars. The third contribution is to the discussion on mission drift by establishing differences in depth of credit outreach between savings-offering and loan-only MFIs.We use panel data from 157 MFIs operating in 19 countries in the ECA region reported by individual MFIs in the Microfinance Information Exchange (MIX) over 5 years. The capital structure variables are collected from a unique database provided by a grass-root network Microfinance Centre (MFC) and available only for 2005 to 2009 period. This explains why our panel is limited to the given period of time. We apply semiparametric quasi-experimental PSM, as well as dose-response function approaches to estimate the impact of offering savings on financial sustainability and credit outreach of MFIs. Estimation of the dose-response function (Guardabascio & Ventura, 2014) provides an opportunity to take into account the continuous nature of treatment, which in our case is the relative share of deposits. In both settings we use data on capital structure of MFIs, operations profile (age, outreach direction, profit status, risk profile), and country level macro data.Our main findings suggest that the simultaneous delivery of loans and savings is associated with better financial performance measured by return on asset (ROA) by about 3 percentage points. We also find that MFIs offering savings service have over 5,000 more borrowers, likely owing to scale economies. At the same time, those MFIs offering savings seem to focus more on richer borrowers (have lower depth of outreach, measured by the average loan size divided by the country's gross national income (GNI) per capita). These results support the ideas for mission drift for savings-collecting MFIs in ECA region. We also note that in most countries in the region, only regulate...

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Performance and Capital Structure of Microfinance Institutions in Eastern Europe and Central Asia

Cited by 40 publications

References 34 publications

Firm performance and ownership structure: Dynamic network data envelopment analysis approach

Firm performance and ownership structure: Dynamic network data envelopment analysis approach

Regulation, Outreach, and Sustainability of Microfinance Institutions in Sub‐Saharan Africa: A Multilevel Analysis

Is the model “loans‐plus‐savings” better for microfinance in Eastern Europe and Central Asia? A propensity score matching comparison

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