NEXUS BETWEEN OUTREACH AND PRODUCTIVITY OF MICROFINANCE IN LATIN AMERICA
Keywords:
Outreach; Productivity; Latin American Countries; GMMAbstract
Our work aims to consider the effect of outreach on the productivity of staff working in microfinance institutions (MFIs). The study considers the panel data of Latin American countries for the period of 2006-2020. For this study, we use several techniques, including Ordinary least square (OLS), Random effect model (RE) and generalized method of momentum(GMM). Accessing poor customers is more dangerous to MFIs and harmful for staff efficiency and productivity. So, we disclosed that the influence of depth of outreach on staff productivity is negative. Whilethe breadth of outreach is found to impact staff productivity, serving better off clients positively is not risky for MFIs and improves the institution's productivity. Better off clients provide a cushion against credit risk, so MFIs are more focused on extending the loan to these clients, increasing staff productivity. GMM also present the same results. MFIs prefer to provide loan facilities to all those customers who work for, extending the staff productivity, and this technique also reduces the credit risk. Our study on the impact of MFIs outreach on its productivity is comparatively new in the microfinance field instead of others studies like impact on efficiency, sustainability and profitability.
References
Abdulai, A., &Tewari, D. D. (2017). Trade-off between outreach and sustainability of microfinance institutions: evidence from sub-Saharan Africa. Enterprise Development and Microfinance, 28(3), 162-181.
Anderson, T. J., Gregoire, J., Pearson, G. J., Barry, A. R., Couture, P., Dawes, M., ...&Hegele, R. A. (2016). 2016 Canadian Cardiovascular Society guidelines for the management of dyslipidemia for the prevention of cardiovascular disease in the adult. Canadian Journal of Cardiology, 32(11), 1263-1282.
Arellano, M., &Bover, O. (1995).Another look at the instrumental variable estimation of error-components models. Journal of econometrics, 68(1), 29-51.
Ashraf, A., Kabir Hassan, M., & J. Hippler III, W. (2014).Performance of microfinance institutions in Muslim countries. Humanomics, 30(2), 162-182.
Ashraf, M. A. (2014). The theory of planned behavior and microfinance participation: From the perspective of nonparticipating rural poor in Bangladesh. Research Journal of Finance and Accounting, 5(7), 159-168.
Athanasoglou, P. P., Asimakopoulos, I. G., & Georgiou, E. A. (2005). The effect of merger and acquisition announcement on Greek bank stock returns. Economic Bulletin, (24), 27-44.
Ayayi, A. G., &Sene, M. (2010). What drives microfinance institution's financial sustainability? The Journal of Developing Areas, 303-324.
Bhanot, D., &Bapat, V. (2015).Sustainability index of micro finance institutions (MFIs) and contributory factors. International Journal of Social Economics, 42(4), 387-403.
Bhatt, N., & Tang, S. Y. (2001).Delivering microfinance in developing countries: Controversies and policy perspectives. Policy studies journal, 29(2), 319-333.
Bhatt, N., & Tang, S. Y. (2001). Designing group-based microfinance programs: Some theoretical and policy considerations. International Journal of Public Administration, 24(10), 1103-1125.
Bhatt, N., & Tang, S. Y. (2001).Making microcredit work in the United States: Social, financial, and administrative dimensions. Economic Development Quarterly, 15(3), 229-241.
Christen, R. (2001). Commercialization and Mission Drift: The Transformation of Microfinance in Latin America.
Khalaf, L. S., &Saqfalhait, N. I. (2019).The Effect of Microfinance Institutions Activities on Economic Growth in Arab Countries. Academy of Accounting and Financial Studies Journal.
Pollinger, J. J., Outhwaite, J., & Cordero‐Guzmán, H. (2007).The question of sustainability for microfinance institutions. Journal of Small Business Management, 45(1), 23-41.
Sensarma, A., Madewell, J. E., Meis, J. M., Kumar, R., Lin, P. P., &Amini, B. (2015). Regression of an enchondroma: a case report and proposed etiology. Skeletal radiology, 44(5), 739-742.
Christen, R. P., Rhyne, E., Vogel, R. C., & McKean, C. (1995). AMaximizing the Outreach of Microenterprise Finance: The Emerging Lessons of Successful Programs, @ USAID Program and Operations Assessment Report No. 10. Washington, DC: AID Center for Development Information and Evaluation.
Conning, J. (1999). Outreach, sustainability and leverage in monitored and peer-monitored lending. Journal of development economics, 60(1), 51-77.
Cull, R., Demirgu¨ ç‐Kunt, A., &Morduch, J. (2007). Financial performance and outreach: A global analysis of leading microbanks. The Economic Journal, 117(517), F107-F133.
Cull, R., Demirgu¨ ç‐Kunt, A., &Morduch, J. (2007). Financial performance and outreach: A global analysis of leading microbanks. The Economic Journal, 117(517), F107-F133.
Cull, R., Demirgüç–Kunt, A., &Morduch, J. (2011). Microfinance trade-offs: Regulation, competition and financing. In The handbook of microfinance (pp. 141-157).
De Crombrugghe, A., Tenikue, M., &Sureda, J. (2008).Performance analysis for a sample of microfinance institutions in India. Annals of public and cooperative economics, 79(2), 269-299.
Dissanayake, D. M. N. S. W. (2012). The determinants of return on equity: evidences from Sri Lankan microfinance institutions. International Refereed Research Journal, 3(2), 2.
Gonzalez, A. (2007). Efficiency drivers of microfinance institutions (MFIs): The case of operating costs. Microbanking bulletin, (15).
Gutierrez-Nieto, B., Serrano-Cinca, C., &Molinero, C. M. (2007).Microfinance institutions and efficiency. Omega, 35(2), 131-142.
Hassan, M. K., &Tufte, D. R. (2001). The x-efficiency of a group-based lending institution: The case of the Grameen Bank. World Development, 29(6), 1071-1082.
Hermes, N., &Lensink, R. (2007). Impact of microfinance: a critical survey. Economic and Political Weekly, 462-465.
Hermes, N., &Meesters, A. (2011). The performance of microfinance institutions: Do macro conditions matter?In The handbook of microfinance (pp. 173-201).
Hsiao, C. (2014). Analysis of panel data (No. 54).Cambridge university press.
Hudon, M. (2009). Should access to credit be a right?. Journal of business ethics, 84(1), 17-28.
Hudon, M., &Traca, D. (2011). On the efficiency effects of subsidies in microfinance: An empirical inquiry. World development, 39(6), 966-973.
Kablan, S. (2012). Microfinance efficiency in the West African economic and monetary union: have reforms promoted sustainability or outreach?.
Kar, A. K. (2012). Does capital and financing structure have any relevance to the performance of microfinance institutions?. International Review of Applied Economics, 26(3), 329-348.
Kent, D., &Dacin, M. T. (2013). Bankers at the gate: Microfinance and the high cost of borrowed logics. Journal of Business Venturing, 28(6), 759-773.
Kumar Kar, A. (2011). Microfinance institutions: A cross-country empirical investigation of outreach and sustainability. Journal of Small Business & Entrepreneurship, 24(3), 427-446.
Lafourcade, A. L., Isern, J., Mwangi, P., & Brown, M. (2005).Overview of the outreach and financial performance of microfinance institutions in Africa. Microfinance Information eXchange, Washington, DC. http://www. mixmarket. org/medialibrary/mixmarket/Africa_Data_Study.
Ledgerwood, J. (1999). Microfinance Handbook: Sustainable Banking with the Poor, an Institutional and Financial Perspective. Washington DC: World Bank.
Ledgerwood, J. (1999). Sustainable banking with the poor microfinance handbook.
Meyer, R. L. (2002). The demand for flexible microfinance products: Lessons from Bangladesh. Journal of international development, 14(3), 351-368.
Mia, M. A., &Chandran, V. G. R. (2016).Measuring financial and social outreach productivity of microfinance institutions in Bangladesh. Social Indicators Research, 127(2), 505-527.
Mohsin, S., Bashir, M. F., & Bin Tariq, D. (2018).Outreach and Performance Analysis of Microfinance Banks in Pakistan. Syed Mohsin, Malik Faheem Bashir, Yasir Bin Tariq,(2018)" Outreach and Performance Analysis of Microfinance Banks in Pakistan", Business and Economic Review, 10(3), 1-28.
Montgomery, H., & Weiss, J. (2011). Can commercially-oriented microfinance help meet the millennium development goals? Evidence from Pakistan. World Development, 39(1), 87-109.
Morduch, J. (1999). Between the state and the market: Can informal insurance patch the safety net?. The World Bank Research Observer, 14(2), 187-207.
Morduch, J. (1999). The microfinance promise. Journal of economic literature, 37(4), 1569-1614. Morduch, J. (2000). The microfinance schism. World development, 28(4), 617-629.
Navajas, S., Schreiner, M., Meyer, R. L., Gonzalez-Vega, C., & Rodriguez-Meza, J. (2000). Microcredit and the Poorest of the Poor: Theory and Evidence from Bolivia. World development, 28(2), 333-346.
Nyamsogoro, G. D. (2010). Financial sustainability of rural microfinance institutions (MFIs) in Tanzania (Doctoral dissertation, University of Greenwich).
Quayes, S. (2012). Depth of outreach and financial sustainability of microfinance institutions. Applied Economics, 44(26), 3421-3433.
Rahman, M. A., &Mazlan, A. R. (2014).Determinants of financial sustainability of microfinance institutions in Bangladesh. International Journal of Economics and Finance, 6(9), 107-116.
Rhyne, E. (1998). The yin and yang of microfinance: Reaching the poor and sustainability. MicroBanking Bulletin, 2(1), 6-8.
Rhyne, E., & Otero, M. (2006). Microfinance through the next decade: Visioning the who, what, where, when and how. Boston, MA: ACCION International.
Robinson, M. S. (2001). The microfinance revolution: Sustainable finance for the poor. The World Bank.
Roodman, D. (2006). How to do xtabond2: an introduction to ‘difference’and ‘system. In GMM in STATA’, Center for Global Development Working Paper No. 103.
Schreiner, M. (2002). Aspects of outreach: A framework for discussion of the social benefits of microfinance. Journal of international development, 14(5), 591-603.
Serrano-Cinca, C., & Gutiérrez-Nieto, B. (2014). Microfinance, the long tail and mission drift. International Business Review, 23(1), 181-194.
Serrano-Cinca, C., & Gutiérrez-Nieto, B. (2014). Microfinance, the long tail and mission drift. International Business Review, 23(1), 181-194.
Windmeijer, F. (2005).A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of econometrics, 126(1), 25-51.
Wooldridge, J. M. (2002). Inverse probability weighted M-estimators for sample selection, attrition, and stratification. Portuguese Economic Journal, 1(2), 117-139.
Yazdanfar, D. (2013). Profitability determinants among micro firms: evidence from Swedish data. International Journal of Managerial Finance, 9(2), 151-160.
Zeller, M., & Meyer, R. L. (Eds.). (2002). The triangle of microfinance: Financial sustainability, outreach, and impact. Intl Food Policy Res Inst.
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
- Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Notices:
You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .
No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.
