Firm-Level Attributes and Performance of Micro-Finance Institutions

35 Pages Posted: 22 Sep 2011

See all articles by Ali Ashraf

Ali Ashraf

University of New Orleans - College of Business Administration

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Date Written: September 17, 2011

Abstract

We identify two sets of explanatory variables; a) country-specific and b) firm-specific features, that explains MFIs financial performance and overall efficiency. Our study is one of the few recent researches to focus on a bigger cross-sectional dataset of total 2138 firm-years for 754 unique MFIs across 83 countries in six geographic regions. We show that overall effect of Country GDP size is generally negative for Return on Asset but once diversity of capital structure is accounted for, the impact on ROE is not robust. Country GDP growth has positive and fairly robust effect on ROA; however, positive and less robust for ROE; and negative and less robust effect on Real Yield on Loan Portfolio. Impact of MFIs information disclosure on overall performance is negative and significant for ROA but positive; less significant for ROE and fairly robust and positive for Real Yield. In general, user’s perception on MFIs legal status has positive impact on outreach measures and negative effects on default but negative ROA explains the trade-off from regulatory burden. In general, MFIs maturity is in general not significant for outreach measures and loan default measures but significant for Net Profit Margin. MFIs size and number of offices explain some variations in outreach measures and profitability measure although they do not explain much on loan default measures. We find weak evidence among MFIs women participation and their outreach measures, loan default and profitability measures across the geographical regions.

Keywords: MFI, Firm Level Attributes, Country Characteristics, Performance Matrix

JEL Classification: G30, G32, J23

Suggested Citation

Ashraf, Ali and Hassan, M. Kabir, Firm-Level Attributes and Performance of Micro-Finance Institutions (September 17, 2011). Midwest Finance Association 2012 Annual Meetings Paper, Available at SSRN: https://ssrn.com/abstract=1929587 or http://dx.doi.org/10.2139/ssrn.1929587

Ali Ashraf

University of New Orleans - College of Business Administration ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

M. Kabir Hassan (Contact Author)

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

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