The size and growth of microfinance institutions

Jose Linares-Zegarra; John O. S. Wilson

doi:10.1016/j.bar.2017.11.006

The size and growth of microfinance institutions

Jose Linares-Zegarra, John O. S. Wilson

Centre for Responsible Banking and Finance

Research output: Contribution to journal › Article › peer-review

Abstract

We investigate the relationship between size (measured by total assets and number of active borrowers) and growth for a worldwide sample of microfinance institutions with different ownership forms (micro-banks, NGOs, cooperatives/credit unions and non-bank financial institutions) and commercial orientation (profit and not-for-profit) drawn from 120 countries over the period 2000 to 2014. Using a dynamic panel data model, we find little evidence that size confers growth advantages to microfinance institutions. We find some evidence that growth rates for credit unions and microfinance institutions with a not-for-profit commercial orientation present negative persistence. The variability of growth rates differs across the size distribution of microfinance institutions, and this result is consistent across commercial orientation and ownership form. Other factors affecting the growth of microfinance institutions include age (new microfinance institutions grow faster than young and mature counterparts), levels of bad debt, efficiency and regulation.

Original language	English
Pages (from-to)	199-213
Number of pages	15
Journal	British Accounting Review
Volume	50
Issue number	2
Early online date	2 Dec 2017
DOIs	https://doi.org/10.1016/j.bar.2017.11.006
Publication status	Published - Feb 2018

Keywords

Gibrat's law
Growth
Microfinance
Outreach
Persistence

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.bar.2017.11.006

Wilson_2017_BAR_SizeGrowthMicroFinInst_AAM
© 2017, Elsevier Ltd. This work has been made available online in accordance with the publisher’s policies. This is the author created accepted version manuscript following peer review and as such may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1016/j.bar.2017.11.006
Accepted author manuscript, 692 KB

John Ogilvie Stephen Wilson
- jsw7st-andrews.acuk
- Finance (Business School) - Professor, Head of Finance
- Centre for Responsible Banking and Finance
Person: Academic

Cite this

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title = "The size and growth of microfinance institutions",

abstract = "We investigate the relationship between size (measured by total assets and number of active borrowers) and growth for a worldwide sample of microfinance institutions with different ownership forms (micro-banks, NGOs, cooperatives/credit unions and non-bank financial institutions) and commercial orientation (profit and not-for-profit) drawn from 120 countries over the period 2000 to 2014. Using a dynamic panel data model, we find little evidence that size confers growth advantages to microfinance institutions. We find some evidence that growth rates for credit unions and microfinance institutions with a not-for-profit commercial orientation present negative persistence. The variability of growth rates differs across the size distribution of microfinance institutions, and this result is consistent across commercial orientation and ownership form. Other factors affecting the growth of microfinance institutions include age (new microfinance institutions grow faster than young and mature counterparts), levels of bad debt, efficiency and regulation.",

keywords = "Gibrat's law, Growth, Microfinance, Outreach, Persistence",

author = "Jose Linares-Zegarra and Wilson, {John O. S.}",

note = "Financial support from the Research Committee Funds - Essex Business School (EBS) is gratefully acknowledged by the authors.",

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AB - We investigate the relationship between size (measured by total assets and number of active borrowers) and growth for a worldwide sample of microfinance institutions with different ownership forms (micro-banks, NGOs, cooperatives/credit unions and non-bank financial institutions) and commercial orientation (profit and not-for-profit) drawn from 120 countries over the period 2000 to 2014. Using a dynamic panel data model, we find little evidence that size confers growth advantages to microfinance institutions. We find some evidence that growth rates for credit unions and microfinance institutions with a not-for-profit commercial orientation present negative persistence. The variability of growth rates differs across the size distribution of microfinance institutions, and this result is consistent across commercial orientation and ownership form. Other factors affecting the growth of microfinance institutions include age (new microfinance institutions grow faster than young and mature counterparts), levels of bad debt, efficiency and regulation.

KW - Gibrat's law

KW - Growth

KW - Microfinance

KW - Outreach

KW - Persistence

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The size and growth of microfinance institutions

Abstract

Keywords

UN SDGs

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John Ogilvie Stephen Wilson

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