Lending technologies, competition and consolidation in the market for microfinance in Bolivia

Navajas, Sergio; Conning, Jonathan; González-Vega, Claudio

doi:10.1002/jid.1024

Cited by 100 publications

(75 citation statements)

References 13 publications

(16 reference statements)

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“…Percent of Share capital on assets and that of total equity on assets (Table 8) were significant and positively associated with financial self-sufficiency, further demonstrating that if an MFI was run with its owners' capital and equity, its sufficiency improved, consistent with Navajas, Conning and Gonzalez (2003). MFI dummies continued to be positively related with financial self-sufficiency, further confirming that MFIs' management varied in interacting capital structure and MFI characteristics but aimed at efficiency, agreeing with Basu, Blavy and Yulek, (2004).…”

Section: Econometric Analysis Resultsmentioning

confidence: 61%

Capital Structure and Its Role on Performance of Microfinance Institutions: The Ugandan Case

Sekabira¹

2013

SAR

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Micro Finance Institutions (MFIs) rejuvenate economic prowess in developing countries, after severe shocks like wars, droughts and floods. MFIs are a promising tool to tackle poverty and improve food security. Sustainability of MFIs based on their capital structure ensures sustainability in poverty reduction and improved food security. The limited literature on the impacts of capital structures on MFI performance necessitated the study. Panel data from 14 MFIs was collected based on availability and accessibility. The sources of data were financial and income statements covering five years. Econometric analysis using STATA software was done following methodologies of Bogan and Rosenberg. MFIs lent to both individuals and groups and 79% were not regulated by the Central Bank, 86% had their funding sources as loans, grants, excluding deposits/savings and 73% attained operational self-sufficiency. Debt and grants were negatively correlated to operational and financial sustainability. When sustainability was more constricted to financial sustainability, debt and share capital remained noteworthy. Other than grants, debt was paid back on competitive market interest rates most especially debts from money lenders, whereas share capital fetched in revenues to the MFIs at market interest rates from the borrowers. Grants and debt had a substantialdamagingconsequence on MFI performance. Capital structure was essential in MFIs' sustainability. MFI specific characteristics, like management were also important. Subject to sampling uncertainties, the results indicate that adding to regulation by Central Bank, MFIs must specialize their lending to reduce portfolio at risk. MFIs must reduce dependence on debts and grants and resort to accumulating share capital for long-term sustainability.

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Section: Econometric Analysis Resultsmentioning

confidence: 61%

Capital Structure and Its Role on Performance of Microfinance Institutions: The Ugandan Case

Sekabira¹

2013

SAR

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“…Since further studies (Navajas et al 2003) show that the type of lending methodology used infl uences the success of these organizations, our study includes a variable Individual which is a dummy that takes the value of one if the MFI used individual lending technology.…”

Section: Data and Methodological Issuesmentioning

confidence: 99%

Governance and Performance of Microfinance Institutions in Mediterranean Countries

Bassem

2009

Journal of Business Economics and Management

135

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Abstract. This paper examines empirically the relation between governance mechanisms and the performance of EuroMediterranean microfi nance institutions (MFIs) in terms of outreach and sustainability. Specifi cally, we found that performance-based compensation of managers is not associated with better performance of MFIs. The results identify trade-offs between MFIs outreach and sustainability depending on larger board size, and on higher proportion of unaffi liated directors. Moreover, the study shows that the more women there are on the board the better the performance, and reveals that external governance mechanisms help MFIs to achieve better fi nancial performance. This study also allows us to distinguish other factors leading to better sustainability such as Regulation, and the use of individual lending methodology. However, the MFIs, active as NGOs, seem to be more consistent with their social mission than with their fi nancial performance.

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“…Indeed, the industry is exposed to a high risk of mission drift (Cull, Demirgüç-Kunt, &Morduch, 2009 andHoque, Muhammad, &Rashid, 2011), to adverse effects of competition on both outreach and sustainability of MFIs (Assefa, Hermes, & Meesters, 2013) and saturation issues in particular markets of countries such as Kenya, Nicaragua, Peru, Ecuador, etc. (Navajas, Conning, & Gonzalez-Vega, 2003, Bédécarrats, Bastiaensen, & Doligez, 2012, and Odhiambo, 2014.…”

Section: Introductionmentioning

confidence: 99%

On The Two-Way Relationship between Corporate Reputation and Financial Performance in Microfinance: A Stakeholder Approach

Lusambo¹

2017

IJBM

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This conceptual paper is grounded on three main observations. First, the lack of a theoretical framework on which a consistent model of the two-way relationship between corporate reputation and financial performance can be developed. Second, the lack of microfinance literature on the role played by corporate reputation as a social construct, and an intangible asset, in the strategic management of MFIs. Third, the impact of ethical issues and competitive challenges amplified by the commercialization of microfinance, and their threats to safeguarding the double-bottom (or triple-bottom) line of microfinance. Theoretical findings suggest that the Wu-Stuart Framework can be used as a benchmark to justify an embedded theory of firm underlying the circular link hypothesis into an institutional environment. Thus, the EP-SP-FP model highlights that MFI's corporate reputation could act both as a moderating effect on the dynamic of MFI's financial performance, and a mediating or balancing effect on the trade-off between social, environmental, and financial performance of MFI.

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Lending technologies, competition and consolidation in the market for microfinance in Bolivia

Cited by 100 publications

References 13 publications

Capital Structure and Its Role on Performance of Microfinance Institutions: The Ugandan Case

Capital Structure and Its Role on Performance of Microfinance Institutions: The Ugandan Case

Governance and Performance of Microfinance Institutions in Mediterranean Countries

On The Two-Way Relationship between Corporate Reputation and Financial Performance in Microfinance: A Stakeholder Approach

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