Microfinance Gateway>Do Institutions Matter for Microfinance Profitability? Evidence from Africa

affiliate language sites: Français عربي Español

Home

Library

Jobs

Training and Events

Organizations

Consultants

Library » Do Institutions Matter for Microfinance Profitability? Evidence from Africa

Do Institutions Matter for Microfinance Profitability? Evidence from Africa
May 2011, Muriu, P.

Examining the impact of the institutional environment on MFI profitability

This paper examines the extent to which the institutional environment influences microfinance profitability in Africa. It is based on a study of 167 MFIs across 32 African economies during the period 1997-2008.

The paper reviews literature on the relationship between the institutional environment and microfinance profitability. It analyzes impact of country specific institutional environments on MFI profitability based on data obtained from MIX Market database, World Development indicators and World Bank World Governance Indicators. Major findings include:

MFIs are more profitable in countries with political stability;
Older MFIs suffer less from political instability;
Corruption makes it harder for MFIs to realize profits;
Corruption acts as a barrier to microenterprise activities and slows down growth of portfolio to assets ratio;
Well-developed institutions may make it less costly for MFIs to operate in a fully compliant manner.

The paper states that a policy prescription geared towards MFI specific factors and institutional environments may invigorate the microfinance sector in Africa. It suggests that future research should focus on arriving at country specific conclusions.

Add Review


*First Name:		*Last Name:
Organization:
*Email:
*Country:
(rollover stars to select rating)
Review Title:

Review Text:
I do not want my name, email, or organization to appear with my review. (Country will always appear with posted reviews.)

By clicking "Submit" you confirm that you have read and consent to our Privacy Policy and Terms and Conditions.

Download this Document

Publisher(s):
Social Science Research Network