Microfinance Performance in the OIC Member States – Does Regulation Status Matter?

22 Pages Posted: 27 Nov 2018

See all articles by Iftekhar Ahmed

Iftekhar Ahmed

Universiti Utara Malaysia

Yusnidah Ibrahim

Universiti Utara Malaysia - College of Business

Abul Bashar Bhuiyan

Universiti Malaysia Perlis

Date Written: July 25, 2018

Abstract

Despite the emerging concern of mission drift, microfinance institutions (MFIs) in various developing nations have been commercializing and transforming into regulated financial intermediaries. However, a hidden dread is still alive until it is disclosed that the regulated MFIs are actually performing better in both of their financial and social obligations. Hence, this study aims to investigate the effect of regulatory status on the performance of MFIs, using a panel dataset containing 285 observation years from 23 OIC member states. A robust estimation of OLS techniques to the general form of cross-sectional and temporal dependency were applied. The findings do not show any significant evidence that the regulatory status affects the profitability of MFIs. However, the result indicates that the regulated MFIs decrease their outreach to female clientele. The study additionally reveals that the interest rates accelerate the profitability, but it does not necessarily harm the outreach.

Keywords: microfinance, OIC, outreach, profitability, regulation

JEL Classification: G21, L25

Suggested Citation

Ahmed, Iftekhar and Ibrahim, Yusnidah and Bhuiyan, Abul Bashar, Microfinance Performance in the OIC Member States – Does Regulation Status Matter? (July 25, 2018). Available at SSRN: https://ssrn.com/abstract=3278426 or http://dx.doi.org/10.2139/ssrn.3278426

Iftekhar Ahmed (Contact Author)

Universiti Utara Malaysia ( email )

School of Economics, Finance and Banking
College of Business
Sintok, Kedah 06010
Malaysia

Yusnidah Ibrahim

Universiti Utara Malaysia - College of Business ( email )

Sintok, Kedah 06010
Malaysia

Abul Bashar Bhuiyan

Universiti Malaysia Perlis ( email )

School of Materials Engineering
Jejawi
Arau, 02600
Malaysia

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