Is there a difference in performance by the legal status of microfinance institutions?

Tchuigoua, Hubert Tchakoute

doi:10.1016/j.qref.2010.07.003

Cited by 137 publications

(102 citation statements)

References 28 publications

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“…Separation is warranted because of the way rural banks and nonbank financial institutions (NBFIs) operate, which is on a local scale and without the use of intermediaries, unlike big banks, which adopt structures centralized in urban centers and have difficulties serving distant communities without the use of intermediaries (Cyree & Spurlin, 2012). The study also differentiates itself by using a subsequent time period, updating the results found by Tchakoute-Tchuigoua (2010), and applying the panel data regression technique to deal with the time period and with the variables used.…”

Section: Introductionmentioning

confidence: 79%

“…The literature highlights the number of active MFI customers (Tchakoute-Tchuigoua, 2010), the number of loans granted to women (Cull, Demirgüç-Kunt, & Morduch, 2011), and the average values of loans granted (Cull et al, 2011;Tchakoute-Tchuigoua, 2010), as variables that are commonly used to measure the social performance of MFIs.…”

Section: Mfi Social Performancementioning

confidence: 99%

“…Governments, investors, and donors hope that independently of the legal form adopted MFIs can operate using the revenues derived from the services offered to their customers (Roberts, 2013). It is also important for for-profit MFIs that investors perceive that the institutions are generating profits from the investments made, whether with dividends from the profit derived from the loan operations carried out or with capital gains derived from an increased valuation of ownership rights (Tchakoute-Tchuigoua, 2010).…”

Section: Mfi Financial Performancementioning

confidence: 99%

“…Today, the microfinance market is dominated by three different ownership structures: cooperatives, nongovernmental organizations (NGOs), and for-profit institutions (Tchakoute-Tchuigoua, 2010). If, on one hand, the operations of for-profit MFIs are seen as predatory for the microfinance market, since these institutions can exaggerate when charging interest in order to maintain returns, thus discouraging future customers who fear getting excessively in debt and not being able to pay off their loans (Roberts, 2013), on the other hand, an excessive focus on the social orientation can make MFIs unsustainable.…”

Section: Legal Form and Mfismentioning

confidence: 99%

“…In this context, legal form comes to be observed as a determinant for agency cost and for MFI performance, given the demands of the market, of investors, donors, and governments, which invest resources in microfinance (Tchakoute-Tchuigoua, 2010). This paper builds upon the study from TchakouteTchuigoua (2010), innovating on two points: by using control variables, MFI size and solvency ratio, and by separating banks from other for-profit MFIs.…”

Section: Introductionmentioning

confidence: 99%

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The relationship between the performance and legal form of microfinance institutions

Costa

2017

Rev. contab. finanç.

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This paper investigates the relationship between the legal forms adopted by microfinance institutions (MFIs) and their performance within three scopes: financial performance, social performance, and efficiency in resource allocation. The MFIs studied are classified into four groups: banks, non-governmental organizations, cooperatives, and a fourth group formed of for-profit institutions not characterized as banks, made up of non-bank financial institutions (NBFIs) and rural banks. The data used are annual and cover the six years from 2007 to 2012. The quantitative regression model with panel data was used together with dummy variables to compare between the four groups of legal forms, except for the group made up of NBFIs and rural banks, which was not represented by any dummy variable. 304 MFIs from 59 countries made up the sample. In the study it was observed that larger MFIs have higher profits, higher returns, and higher operational self-sufficiency rates than smaller MFIs, indicating that MFI growth could enable consolidation in the microfinance market. The results also indicate that for smaller MFIs the way to consolidate and improve the indicators could be through assimilating or merging with other MFIs. It was also noted that non-bank financial institutions and rural banks are able to serve more customers and that cooperatives provide smaller loans, causing a bigger social impact, and that they obtain higher returns and profits. The results indicate that these legal forms may be the most appropriate for the microfinance market.

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Section: Introductionmentioning

confidence: 79%

Section: Mfi Social Performancementioning

confidence: 99%

Section: Mfi Financial Performancementioning

confidence: 99%

Section: Legal Form and Mfismentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The relationship between the performance and legal form of microfinance institutions

Costa

2017

Rev. contab. finanç.

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Determinants of the Performance of Microfinance Institutions: A Systematic Review

Hermes

Hudon

2019

Contemporary Topics in Finance

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Microfinance institutions (MFIs) generally aim at improving the access of the poor to financial services while at the same time being financially sustainable. But what do we know about how MFIs reach and combine these two goals? We carry out a systematic review of close to 170 articles discussing the determinants of the financial and social performance of MFIs. The review shows that the most important determinants addressed in the literature are MFI characteristics (size, age, type of organization), their funding sources, the quality of organizational governance and the MFIs' external context such as macroeconomic, institutional and political conditions. The evidence on these issues is rather mixed.Moreover, the direction of the relationship between these drivers and MFI performance depends on the context, particularly the country-specific context. Finally, there is a lack of consensus in the literature on the measurement of financial and social performance. Due to the complexity of the concept, we argue that social performance should only be assessed by using a multidimensional perspective. This can be done either by applying recent and holistic social performance measures such as the SPI4, or at least by using a combination of proxies, such as outreach, gender and rural measures. Burzynska, K., & Berggren, O. (2015). The impact of social beliefs on microfinance performance.

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Are microfinance institutions' financial performance gender driven? Evidence from Argentina

2021

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This paper studies the determinants of financial performance (return on assets, ROA) of 18 Argentine Microfinance Institutions (MFIs) from 2002 to 2018. We apply the random forest algorithm to predict the ROA of the Argentine MFIs, introducing two social variables to capture the depth of the outreach such as the female ratio and the average size of the loan portfolio divided by the GDP per capita. We also consider five other main explanatory variables, such as the size, efficiency, quality of loan portfolio, solvency, and productivity ratio, as well as macroeconomic variables. Although our results indicate that the quality of the loan portfolio and efficiency are the most important variables in predicting ROA, we find that social variables are also important; in particular, the female ratio, which is the third relevant predictor of ROA. In contrast, macroeconomic variables and the financial crisis turn out to be insignificant in our analysis.

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Is there a difference in performance by the legal status of microfinance institutions?

Cited by 137 publications

References 28 publications

The relationship between the performance and legal form of microfinance institutions

The relationship between the performance and legal form of microfinance institutions

Determinants of the Performance of Microfinance Institutions: A Systematic Review

Are microfinance institutions' financial performance gender driven? Evidence from Argentina

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