The Microfinance Review

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Impact of Competition on MFIs’ Outreach: A Cross Country Analysis of India and Bangladesh


Affiliations
1 Department of Commerce, Assam University, Silchar, India
     

   Subscribe/Renew Journal


The microfinance sector, of late, is featured by intense competition, driven mainly by the forces of up-scaling, downscaling and greenfield microfinance institutions (MFIs). With increased competition, the MFIs face challenges to balance sustainability with their ultimate mission to reach the poor. Against this backdrop, the present paper attempts to assess the impact of competition on social performance of MFIs in India and Bangladesh. With the help of panel data on 75 MFIs for seven years from 2009 to 2015, the study finds that competition has no significant impact on social performance of MFIs measured in terms of outreach depth and breadth. While matured MFIs are more committed to social performance of MFIs, sustainability positively and significantly influences social performance of MFIs. The analysis also reveals that there exists a statistically significant difference in the social performance (outreach breadth and depth) of MFIs operating in India and Bangladesh.

Keywords

Microfinance Institutions, Social Performance, Outreach, Commercialisation.
User
Subscription Login to verify subscription
Notifications
Font Size

  • Armendáriz, B and Szafarz, A (2011): On Mission Drift in Microfinance Institutions. Retrieved from https://www.worldscientific.com. Accessed on 17-08-2018.

  • Assefa E, Hermes N and Meester. A (2013): “Competition and the Performance of Microfinance Institutions”, Applied Financial Economics, Vol. 23, No. 9, pp.767-782.

  • Christen, R P (2001): Commercialisation and Mission Drift: the Transformation of Microfinance in Latin America, Occasional Paper No.5, CGAP – The Consultative Group to Assist the Poor (A Microfinance Programme), Washington DC.

  • Claessens, S (2009): Competition in the Financial Sector: Overview of Competition Policies, IMF Working Paper: WP/09/45, Retrieved from SSRN: https://ssrn.com, accessed on 11-05-2017.

  • Cull, R, A Demirguc-Kunt and J Morduch (2014): “Banks and Microbanks”, Journal of Financial Services Research, Vol. 46, No. 1, pp.1-53.

  • Florian, L (2015): Measuring Competition in Banking: A Critical Review of Methods, ffhalshs01015794v2, Accessed from https://halshs.archives-ouvertes.fr/halshs-01015794v2 on June 1, 2019.

  • Gwasi, N and Ngambi, M T (2014): “Competition and Performance of Microfinance Institutions in Cameroon”, International Journal of Research in Social Sciences, April 2014, Vol. 3, No. 8, pp.1-22.

  • Hermes, N, Lensink, R and Meesters, A (2008): Outreach and Efficiency of Microfinance Institutions, SOM Research Reports, Vol. 08002, University of Groningen, Groningen.

  • Hermes, N, R Lensink and A Meesters (2009): Financial Development and the Efficiency of Microfinance Institutions, Centre for International Banking, Insurance and Finance Working Paper, University of Groningen, Groningen.

  • Hisako, K (2009): “Competition and Wide Outreach of Microfinance Institutions”, Economics Bulletin, Vol. 29, No. 4, pp.2628-2639.

  • Hossain, S (2013): “Is Commercialisation of Microfinance Responsible for OverIndebtedness? The Case of Andhra Pradesh Crisis”, Journal of Economics and Sustainable Development, Vol. 4, No. 17, pp.142-153.

  • Kar, A K and R B Swain (2014): Competition, Performance and Portfolio Quality in Microfinance Markets, Working Paper 2014:8, Department of Economics, Uppsala University, Sweden.

  • Kumar, K A and Bali. R S (2014): Competition, Performance and Portfolio Quality in Microfinance Markets, Working Paper Series 2014:8, Department of Economics, Uppsala University, Sweden.

  • Morduch, J (2000): “The Microfinance Schism”, World Development, Vol. 28, No. 4, pp.617-629.

  • Motta, M (2004): Competition Policy: Theory and Practice, Cambridge University Press, Cambridge.

  • Olivares, F P (2005): “Commercializing Microfinance and Deepening Outreach? Empirical Evidence from Latin America”, Journal of Microfinance / ESR Review, Vol. 7. No. 2, pp.47-69.

  • Schreiner, M (2001): “Seven Aspects of Loan Size”, Journal of Microfinance, Vol. 3, No. 2, pp.27-48.

  • Schreiner, M (2002): “Aspects of Outreach: A Framework for Discussion of the Social Benefits of Microfinance”, Journal of International Development, Vol. 14, No. 5, pp.591-603.

  • Sharma, M K and Graham A N Wright (2010): “Commercialization of Microfinance in India: Is It All Bad?”, MicroSave India Focus Note 43, May.

  • Taylor, M (2011): “Freedom from Poverty is Not For Free: Rural Development and the Microfinance Crisis in Andhra Pradesh”, Journal of Agrarian Change, Vol. II, No. 4, pp.484-504.


Abstract Views: 276

PDF Views: 0




  • Impact of Competition on MFIs’ Outreach: A Cross Country Analysis of India and Bangladesh

Abstract Views: 276  |  PDF Views: 0

Authors

Joyeeta Deb
Department of Commerce, Assam University, Silchar, India

Abstract


The microfinance sector, of late, is featured by intense competition, driven mainly by the forces of up-scaling, downscaling and greenfield microfinance institutions (MFIs). With increased competition, the MFIs face challenges to balance sustainability with their ultimate mission to reach the poor. Against this backdrop, the present paper attempts to assess the impact of competition on social performance of MFIs in India and Bangladesh. With the help of panel data on 75 MFIs for seven years from 2009 to 2015, the study finds that competition has no significant impact on social performance of MFIs measured in terms of outreach depth and breadth. While matured MFIs are more committed to social performance of MFIs, sustainability positively and significantly influences social performance of MFIs. The analysis also reveals that there exists a statistically significant difference in the social performance (outreach breadth and depth) of MFIs operating in India and Bangladesh.

Keywords


Microfinance Institutions, Social Performance, Outreach, Commercialisation.

References