Institutional Analysis to Understand the Growth of Microfinance Institutions in West African Economic and Monetary Union

Corporate Governance, Vol. 12 Iss: 4, pp.441 - 459

32 Pages Posted: 13 Jul 2009 Last revised: 17 Sep 2012

See all articles by Arvind Ashta

Arvind Ashta

CEREN EA 7477 Burgundy School of Business - Université Bourgogne Franche-Comté

Salimata

International University of Grand Bassam

Date Written: 2012

Abstract

Purpose – The extent to which microfinance succeeds varies greatly even among countries. The paper aims to look at why microfinance develops in some countries rather than others. It aims to identify institutional factors that can be introduced to enable microfinance to succeed in a country.

Design/methodology/approach – A small-sample comparative approach is used, combined with correlation analysis. The research methodology was dictated by the need to find countries that are culturally similar and have the same regulation in order to be able to study other elements.

Findings – The authors find that the success of microfinance is linked to its economic performance, in terms of both levels of per capita income and growth, as well as regulatory and public governance, with the amount of remittances being received in a country and with life expectancy at birth.

Research limitations/implications – Different sources provide different data. So, the findings may not be robust but it is the best available data.

Practical implications – The data shows a high correlation between aid and the development of microfinance and also more so between remittances and the growth of this sector. This has some implications for policies aiming at developing entrepreneurship through microfinance.

Originality/value – Most papers when looking at the success of microfinance across regions have failed to take into account differences in cultures and regulations; thus there is a residual bias. The paper's originality stems from the fact that it explains the success of microfinance while controlling for cultural and regulatory factors, and also goes into public governance indicators. This kind of comparative institutional analysis has not been performed for this region.

Keywords: Economic development, Institutional analysis, Microfinance, Public governance, Regional development, Regulation, West African economic and monetary union

JEL Classification: O1, O17, O55, G2, G28, G38

Suggested Citation

Ashta, Arvind and Fall, Ndeye Salimata, Institutional Analysis to Understand the Growth of Microfinance Institutions in West African Economic and Monetary Union (2012). Corporate Governance, Vol. 12 Iss: 4, pp.441 - 459. Available at SSRN: https://ssrn.com/abstract=1433063

Arvind Ashta (Contact Author)

CEREN EA 7477 Burgundy School of Business - Université Bourgogne Franche-Comté ( email )

29 rue Sambin
21000 Dijon
France

Ndeye Salimata Fall

International University of Grand Bassam ( email )

Route de Bonoua
BP 564 Grand Bassam
Grand Bassam
Ivory Coast (Cote D'ivoire)

HOME PAGE: http://www.iugb.org

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