Uncovering Microfinance Myths: Does Country-Wide Age Matter?

Aghion, Beatriz Armendáriz de; Vanroose, Annabel

doi:10.3917/rpve.483.0007

Cited by 5 publications

(5 citation statements)

References 3 publications

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“…In weaker environments, microfinance could reach a certain level of saturation and therefore could create a poisoning effect destructive to sustainable development and poverty reduction objectives. This is also consistent with the theoretical predictions of , Buera et al (2017), and also country examples of microfinance failures (Bateman, 2010;Armendáriz & Vanroose, 2009). Our results are also consistent with those of other related studies (Lopatta & Tchikov, 2016Donou-Adonsou & Sylwester, 2016;Lacalle-Calderón et al, 2015) that find a positive and significant contribution of microcredit to economic growth.…”

Section: Regionssupporting

confidence: 91%

“…Clusters 1 and 2. The result is consistent with Vanroose (2008) and Armendáriz and Vanroose (2009) that microfinance is more developed in regions such as Latin America and fast-growing South Asian countries.…”

Section: Regionssupporting

confidence: 91%

“…We observe similar patterns in the same cluster across equations. The strong growth potential of microfinance observed in Clusters 1 and 2 is in line with earlier findings Vanroose, 2008;Armendáriz & Vanroose, 2009) that the outreach of MFIs is more developed in stable countries and operational costs are recovered when economic growth is stronger.…”

Section: Impulse Response Functionssupporting

confidence: 90%

“…Finally, the observed diverse impact of microfinance across clusters could potentially be explained by the "age" of microfinance activity as proxied by the number of years since the sector was introduced into a country (Armendáriz & Vanroose, 2009). As the authors claim, there is a potential country-wide learning curve that could explain the growth and expansion of the microfinance sector (Clusters 1 and 2).…”

Section: Impulse Response Functionsmentioning

confidence: 99%

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The microfinance promise—can it be kept? A macro perspective

Alimukhamedova

2019

Development Policy Review

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After five decades of rapid expansion of microfinance worldwide, little is known about its aggregate effects and whether the “microfinance promise” of poverty reduction holds at the macro level. Challenging questions have arisen. Here we explore the dynamic response of microfinance on economic growth, financial deepening and income inequality. Countries are grouped into three broad clusters (stable, moderate and poor) based on macro‐institutional variables. Our results show that microfinance has a significant long‐term ability to affect the broader economy. However, the impact and dynamics of microfinance differ substantially across macro‐institutional environments. It grows in weaker environments, reaches its peak in developing economies, and then gradually “dies out” in more stable economies. While there is evidence of a positive impact of microfinance at the aggregate level, the response is different depending on whether countries are poor, moderately developed or economically stable. Once countries climb up the macro‐institutional “ladder,” microfinance can take a different shape and its relationship with other macroeconomic fundamentals can change. Our results indicate that microfinance has the strongest effect when the external environment is supportive and proactive; in weak environments, microfinance cannot grow sufficiently. Therefore, more attention should be given to supporting the socioeconomic dimensions of economies.

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Section: Regionssupporting

confidence: 91%

Section: Regionssupporting

confidence: 91%

Section: Impulse Response Functionssupporting

confidence: 90%

Section: Impulse Response Functionsmentioning

confidence: 99%

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The microfinance promise—can it be kept? A macro perspective

Alimukhamedova

2019

Development Policy Review

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“…Furthermore, we also included AGE 2 to check for a non-linear relationship as the relationship is often viewed as a ‘learning curve’. Studies have examined the effects of the learning curve on various aspects of MFI performance, including the history, efficiency, operational expenses and interest rates (Opperud & Torp, 2016; Rosenberg et al, 2013; Vanroose & Armendariz, 2009). Based on the standard economic theory, it is expected that cost improvements occur when a firm gains experience, thus a better financial performance (e.g., productivity & profitability).…”

Section: Methodsmentioning

confidence: 99%

Technological Change and Innovations in Microfinance Institutions: What Matters?

Mia

2020

Global Business Review

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Usage of technology that serves to improve organizational efficiency among financial service providers has substantially increased during the past decade. Similarly, a large number of microfinance institutions (MFIs) have incorporated technological innovation in their operations to provide clients with better financial services. To understand the determinants of technological change in MFIs, this study investigated various factors, including sources of funds, institutional characteristics (IC) and macroeconomic factors. Using longitudinal data (2009–2014) from the microfinance industry in Bangladesh, this study estimated the Malmquist Productivity Index (non-parametric) to decompose the technological change at the first stage. This index was then used as a dependent variable in the second stage to regress against certain independent variables. Overall, it was found that the microfinance industry in Bangladesh observed regression in technological change; however, technological change could be improved by promoting peer borrowing among MFIs. Apart from that, greater autonomy through decentralization of MFI branches could also stimulate technological progress. Interestingly, MFIs located in Dhaka have experienced better technological progress than MFIs located in other parts of the country, which signifies the importance of location. Additionally, the findings also revealed a gap in transfer of technological knowledge from commercial banks to the MFIs that they fund.

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