Banks and Microbanks
Using two new datasets, the authors examine whether the presence of banks affects the profitability and outreach of microfinance institutions. They find evidence that competition matters. Greater bank penetration in the overall economy is associate...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091014140231 http://hdl.handle.net/10986/4270 |
| Summary: | Using two new datasets, the authors
examine whether the presence of banks affects the
profitability and outreach of microfinance institutions.
They find evidence that competition matters. Greater bank
penetration in the overall economy is associated with
microbanks pushing toward poorer markets, as reflected in
smaller average loans sizes and greater outreach to women.
The evidence is particularly strong for microbanks relying
on commercial funding and using traditional bilateral
lending contracts (rather than the group lending methods
favored by microfinance nongovernmental organizations). The
analysis considers plausible alternative explanations for
the correlations, including relationships that run through
the nature of the regulatory environment and the structure
of the banking environment; but it fails to find strong
support for these alternative hypotheses. |
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