IMF Working Papers

The Impact of the Global Financial Crisison Microfinance and Policy Implications

By Gabriel Di Bella

July 1, 2011

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Gabriel Di Bella. The Impact of the Global Financial Crisison Microfinance and Policy Implications, (USA: International Monetary Fund, 2011) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The global financial crisis affected microfinance institutions (MFIs) as lending growth was constrained by scarcer borrowing opportunities, while the economic slowdown negatively impacted asset quality and profitability. It also brought to the fore the relatively high interest rates that MFIs charge to their (low-income) customers. This paper revisits the issue of systemic risk of MFIs, and finds that contrary to the evidence before the crisis, MFI performance is correlated not only to domestic economic conditions but also to changes in international capital markets. It also presents an empirical analysis of lending rates with the purpose of informing policy decisions, and finds that loan sizes, productivity, and MFI age contribute to explain differences in lending rate levels. This suggest that regulation (and policies) promoting MFI competition, and innovation in lending technologies have a better chance to result in decreased lending rates.

Subject: Banking, Emerging and frontier financial markets, Expenditure, Financial institutions, Financial markets, Financial services, International capital markets, Loans, Microfinance, Public expenditure review

Keywords: Central America, Eastern Europe, Emerging and frontier financial markets, Financial crisis, Global, Global financial crisis, Institution type, International capital markets, Lending rate, Lending rate fundamentals, Loans, MFI deterioration, MFI exposure, MFI grouping, MFI institution, MFI performance, MFI portfolio, MFI productivity, MFI transparency, Microfinance, Middle East and Central Asia, Public expenditure review, Return on equity, Show coefficient, South America, Systemic risk, WP

Publication Details

  • Pages:

    28

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2011/175

  • Stock No:

    WPIEA2011175

  • ISBN:

    9781462313303

  • ISSN:

    1018-5941

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