The Vulnerability of Microfinance to Financial Turmoil – Evidence from the Global Financial Crisis

Wagner, Charlotte; Winkler, Adalbert

doi:10.1016/j.worlddev.2013.05.008

Cited by 77 publications

(72 citation statements)

References 32 publications

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“…Lensink (2011) provides evidence that the financial crisis has had negative consequences on MFIs' performance related to profitability, growth and portfolio quality. Wagner and Winkler (2013) confirm the findings of Lensink (2011), adding that credit growth was even more severe for MFIs receiving funds from domestic and international financial markets. Finally, the article of Daher and Le Saout (2015) finds that the financial crisis has had a negative impact in terms of MFI profitability while noting that the more profitable MFIs have less outreach post-crisis.…”

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confidence: 81%

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A meta-analysis examining the nature of trade-offs in microfinance

Reichert

2018

Oxford Development Studies

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Increasingly, microfinance institutions must balance both social and financial objectives, the so-called double bottom line. A growing number of studies have investigated the ability of MFIs to achieve both objectives simultaneously. From an initial sample of 3,299 articles, I synthesize 274 empirical findings from 61 studies to perform a meta-analysis on the relationship between financial and social performance. Findings suggest that studies using the Mix Market database are less likely to confirm trade-offs while articles that use efficiency indicators, employ an economic frontier methodology or are published in development journals are more likely to confirm evidence of performance trade-offs. Abstract Increasingly, microfinance institutions must balance both social and financial objectives, the so-called double bottom line. A growing number of studies have investigated the ability of MFIs to achieve both objectives simultaneously. From an initial sample of 3,299 articles, I synthesize 274 empirical findings from 61 studies to perform a meta-analysis on the relationship between financial and social performance. Findings suggest that studies using the Mix Market database are less likely to confirm trade-offs while articles that use efficiency indicators, employ an economic frontier methodology or are published in development journals are more likely to confirm evidence of performance trade-offs.JEL CODES: C12, G21, L25, L31

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confidence: 81%

“…Understanding the recent financial crisis' impact on microfinance has also attracted the attention of academics (Lensink, 2011;Wagner and Winkler, 2013;Daher and Le Saout, 2015). Lensink (2011) provides evidence that the financial crisis has had negative consequences on MFIs' performance related to profitability, growth and portfolio quality.…”

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confidence: 99%

A meta-analysis examining the nature of trade-offs in microfinance

Reichert

2018

Oxford Development Studies

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“…GDP shrank by around 5 percent, and unemployment jumped in 2009. As studies by Wagner and Winkler (2013) show, microfinance institutions have been no less vulnerable to the crisis than other financial institutions. While the crisis negatively affected both participants and non-participants, there is a difference in timing.…”

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confidence: 99%

Microfinance beyond self-employment: Evidence for firms in Bulgaria

Erhardt¹

2017

Labour Economics

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This paper provides new evidence on the impact of microfinance on job creation beyond selfemployment. We examine wage-employment effects for a typical program in Eastern Europe with average loan sizes that are considerably above what has been studied so far. We apply propensity score matching extended by a difference-in-differences estimator to panel data from an individuallending program to firms in Bulgaria. Our results indicate that microcredit has very positive effects on job creation. Participating firms have on average 2.5 (or 33 percent) more employees two years after receiving a microcredit than matched non-participants. This strong effect seems to be related to a certain loan size threshold necessary for positive impacts to unfold. Effects are largest for the smallest firms, supporting findings from other studies that small firms are more constrained by credit than large firms. Investigating dynamic effects for up to six years after treatment, we furthermore show that effects are long lasting.

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“…For similar reasons that banks failed in Europe and North America, microfinance institutions (MFIs) that had been tapping into international finance markets were particularly vulnerable to the financial crisis (Constantinou and Ashta 2011; Daher and Le Saout 2015;Wagner 2012;Di Bella 2011;Wagner and Winkler 2013). But problems with bad micro-loans were exacerbated by the 2008 food price crisis, reflecting borrowers' position at the base of the pyramid.…”

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confidence: 99%