Premium
Microfinance Institution Performance: Does the Macroeconomy Matter?
Author(s) -
Awaworyi Churchill Sefa,
Korankye Danso Jeffrey,
Nyatefe Elikem
Publication year - 2018
Publication title -
economic papers: a journal of applied economics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 19
eISSN - 1759-3441
pISSN - 0812-0439
DOI - 10.1111/1759-3441.12233
Subject(s) - microfinance , economics , macro , institution , wage , monetary economics , macroeconomics , labour economics , economic growth , computer science , political science , law , programming language
The performance of Microfinance Institutions ( MFI s) has been compared at various levels for the purpose of replications and policy formulations. However, the potential effects of the macroeconomy on MFI performance are often not considered. We propose that understanding the possible effects of country‐level factors on MFI performance can help provide a more accurate evaluation and explain where microfinance fits in the development process. Based on data collected on 1544 MFI s, merged with country‐level macroeconomic and macro‐institutional data, we examine the effects of the macroeconomy on MFI performance. The results suggest that high economic growth is associated with better MFI performance. However, other modes of economic development, including wage employment opportunities, appear to impede MFI financial performance.