Economies of Diversification in Microfinance: Evidence from Quantile Estimation on Panel Data

11 Pages Posted: 7 Sep 2019

See all articles by Emir Malikov

Emir Malikov

University of Nevada, Las Vegas

Valentina Hartarska

Auburn University - Department of Agricultural Economics and Rural Sociology; Auburn University - Department of Finance

Roy Mersland

University of Agder

Date Written: June 25, 2019

Abstract

Prior studies of the diversification-driven cost savings from the joint provision of credit and deposits in microfinance usually ignore the multi-way heterogeneity across MFIs which vary substantially in size, business model, target clientele and operate in diverse environments. Using a quantile panel data model with correlated effects capable of accommodating multiple heterogeneity, we show that the typical measurement of economies of diversification at the mean provides an incomplete and distorted picture of their magnitude and prevalence in the industry. While we find statistically significant estimates, they are modest for most small-size MFIs but are quite substantial for large-scale institutions.

Keywords: cost, diversification, microfinance institutions, quantile regression

JEL Classification: G15, G21, O16, L33

Suggested Citation

Malikov, Emir and Hartarska, Valentina and Mersland, Roy, Economies of Diversification in Microfinance: Evidence from Quantile Estimation on Panel Data (June 25, 2019). Finance Research Letters, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3449768

Emir Malikov (Contact Author)

University of Nevada, Las Vegas ( email )

4505 S. Maryland Parkway
Las Vegas, NV 89154
United States

Valentina Hartarska

Auburn University - Department of Agricultural Economics and Rural Sociology ( email )

Comer Hall
Auburn, AL 36849
United States

Auburn University - Department of Finance ( email )

Auburn, AL 36849
United States

Roy Mersland

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

HOME PAGE: http://www.uia.no/microfinance

Register to save articles to
your library

Register

Paper statistics

Downloads
10
Abstract Views
71
PlumX Metrics