Arun, Thankom and Annim, Samuel Kobina (2010): Economic Governance of MFIs: Inside the Black Box.
Download (166Kb) | Preview
This paper investigates a relationship between economic governance and the dual objectives of Microfinance Institutions (MFIs): poverty reduction and financial viability. Using an unbalanced panel of 531 MFIs the important role of other institutions such as country-level business registry departments in facilitating targeting of poor clients is illuminated. Comparing the estimates of Hausman-Taylor and Fixed Effects Vector Decomposition allows us to scrutinize and at least partially correct the effects of both time invariant and slow changing endogenous variables. We find that credit information availability and lesser time in securing property enhances the chances of MFIs in achieving their poverty reduction objective. Product diversification leading to economies of scope also enables MFIs to reach poor clients. On the basis of the above, it is imperative for government and development partners to channel their efforts towards provision of an enabling atmosphere that will enhance the achievement of microfinance social objectives.
|Item Type:||MPRA Paper|
|Original Title:||Economic Governance of MFIs: Inside the Black Box|
|Keywords:||Microfinance; Dual Objectives; Economic Governance; Property Rights; and Credit Information|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G39 - Other
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Samuel Kobina ANNIM|
|Date Deposited:||29. Aug 2010 09:16|
|Last Modified:||15. Feb 2013 23:20|
Andrews, M., Schank, T. and Upward, R. (2006)."Practical fixed effects estimation methods for the three-way error components model" Stata Journal Vol. 6 No. 4, pp. 461-481
Baltagi, H. B. (2005). Econometric Analysis of Panel Data John Wiley and Sons Ltd. West Sussex, UK.
Cameron, A. C. and Trivedi, P. K., (2009). Microeconometrics Using Stata, Stata Press, Texas, USA.
Coleman A., K. and Osei, K. A., (2007). Outreach and Profitability of Microfinance Institutions: The role of Governance. Journal of Economic Studies Vol. 35 No. 3, 2008 pp. 236-248.
Cull, R., Demirgüc-Kunt, A.and Morduch, J., (2009). “Microfinance Trade-offs Regulation, Competition, and Financing” Policy Research Working Paper 5086, World Bank
Dixit, A., (2009). “Governance Institutions and Economic Activity” American Economic Review Vol. 99: No. 1, pp. 5-24
Hartaska, V., (2005). “Governance and Performance of Microfinance Institutions in Central and Eastern Europe and the Newly Independent States” World Development Vol. 33, No. 10, pp. 1627–1643
Hartaska, V. and Nadolnyak, D., (2007). “Do Regulated Microfinance Institutions achieve better Sustainability and Outreach?” Applied Economics: 39: pp. 1207-1222
Kaufmann, D and Kraay, A., (2008). ‘Governance Indicators: Where Are We, Where Should We Be Going?’ World Bank Research Observer Vol. 23: No. 1, pp. 1-30
Labie, M., (2001). “Corporate Governance in Microfinance Organizations: A long and Winding Road” Management Decisions Vol. 39: No. 4. http://www.emerald-library.com/Insight/viewPDF.jsp?contentType=Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/0010390406.pdf
Mersland, R., StrØm, R. Ø., (2009). “Performance and Governance in Microfinance Institutions” Journal of Banking and Finance Vol. 33: pp. 662-669 Plümper, T. and Troeger, V. E., (2004). “The Estimation of Time-Invariant Variables in Panel Analyses with Unit Fixed Effects”, University of Essex, Working paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=565904 Date Accessed: 10th October 2009
Plümper, T. and Troeger, V. E. (2007). “Efficient Estimation of Time-Invariant and Rarely Changing Variables in Finite Sample Panel Analyses with Unit Fixed Effects”, Political Analysis, 15:124-139.
Porteous, D., (2006). “Competition and Microcredit Interest Rate” CGAP, Focus Note, No. 33. World Bank, Washington D.C, USA.
Royal Swedish Academy of Sciences, (2009). “Economic Governance” http://nobelprize.org/nobel_prizes/laureates/2009/ecoadv09.pdf Date Accessed: 30th October 2009 Rhyne, E. (1998). “The Yin and Yan of Microfinance: Reaching the Poor and Sustainability” Micro Banking Bulletin, vol. 2, no. 1, pp. 6-8. Simon, H. A., (1959). “Theories of decision-making in Economics and Behavioral Science” American Economic Review, v49, pp. 253-283.
Williamson, O. E., (2000). “The New Institutional Economics: Taking stock, looking ahead” Journal of Economic Literature Vol. 38: No 3, pp595–613