Technical Change in the Peruvian Regulated Microfinance Sector

Aguilar, Giovanna; Portilla, Jhonatan

doi:10.1080/10978526.2018.1560225

Cited by 2 publications

(1 citation statement)

References 22 publications

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“…Technological progress in MFIs’ operations is crucial to fulfil the goal of continuously providing banking and financial support to the poor as well as to attain sustainability in the long run. For example, technological progress allows MFIs to attain cost efficiency, growth and expand the frontier of social outreach (Aguilar & Portilla, 2019; Babu, 2016; Mia & Ben Soltane, 2016). Moreover, technological diversification in operations could lead to innovation in firms (Garcia-Vega, 2006), which could be an opportunity for MFIs to mitigate risk (Moro Visconti & Quirici, 2014), enabling them to provide services to people living in the most remote and far-flung areas (Ashta et al, 2015; Singh & Padhi, 2015).…”

Section: Introductionmentioning

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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