Pathways to self-sufficiency in the microfinance ecosystem

Serrano-Cinca, Carlos (Universidad de Zaragoza) ; Cuellar-Fernández, Beatriz (Universidad de Zaragoza) ; Fuertes-Callén, Yolanda (Universidad de Zaragoza)

Resumen: We used latent class growth analysis to study the trajectories followed by microfinance institutions for 10 years. This technique can detect groups of firms that follow different patterns of change over time. We identified groups of institutions that followed the same strategy and iso-performance groups of institutions with the same outcome trajectory. The trajectories were analyzed with categorical regression and decision trees, which constitutes a novel approach to latent class growth analysis. Lending money to the poorest while making a profit is not straightforward and it is challenging for microfinance institutions to be self-sufficient. We found that the most useful strategy was to improve efficiency by lowering operating costs, followed by the control of credit risk. Deviating from the mission also had a positive effect on self-sufficiency, but was a strategy followed by few institutions. Rarely did changes in interest rates or not lending to women prove valuable. The findings are useful for the stakeholders of these institutions and particularly for managers.

Idioma: Inglés

DOI: 10.1016/j.qref.2023.10.007

Año: 2023

Publicado en: Quarterly review of economics and finance 92 (2023), 262-273
ISSN: 1062-9769

Factor impacto JCR: 2.9 (2023)

Categ. JCR: ECONOMICS rank: 123 / 597 = 0.206 (2023) - Q1 - T1

Factor impacto CITESCORE: 6.0 - Economics and Econometrics (Q1) - Finance (Q1)

Factor impacto SCIMAGO: 0.662 - Finance (Q2) - Economics and Econometrics (Q2)

Financiación: info:eu-repo/grantAgreement/ES/AEI/PID2022-136818NB-I00
Financiación: info:eu-repo/grantAgreement/ES/DGA/S38-23R

Tipo y forma: Artículo (Versión definitiva)

Área (Departamento): Área Economía Finan. y Contab. (Dpto. Contabilidad y Finanzas)