nep-mfd New Economics Papers
on Microfinance
Issue of 2006‒02‒05
two papers chosen by
Ana Ogarrio
Kennedy School, Harvard University

  1. Subsidies and financial performances of the microfinance institutions: Does management matter? By Marek Hudon
  2. Microfinance and Female Empowerment By Sylvain Dessy; Jacques Ewoudou

  1. By: Marek Hudon (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels)
    Abstract: This paper uses a unique database from a leading microfinance rating agency to assess the impact of the management of microfinance institutions (MFIs) on their financial performances and the amount of subsidies they have received. The results show that the main management attributes influencing the return on assets are the technical, organisational and communication competences of the top managers. For-profit and non-profit institutions reach similar performances, but cooperatives exhibit worse results. Finally, while the board members’ personnel involvement and professional competences is correlated to the amount of subsidies received by the institutions, the well-managed MFIs do not seem to have previously received significantly more subsidies than others.
    Keywords: microfinance, subsidies, management, governance, non-profit.
    JEL: L31 M54 O16 Q14
    Date: 2006–01
  2. By: Sylvain Dessy; Jacques Ewoudou
    Abstract: In the informal economy of developing countries, female entrepreneurs face a comparative disadvantage for operating high-productivity activities, owing to the prevalence of patriarchal forms of business regulations. Yet, for microfinance institutions (MFIs) to succeed in enhancing female empowerment, increased access to credit must enable female entrepreneurs to tap into the range of high-productivity activities. So when the costs of legality are too high in developing countries, and the informal economy becomes the only affordable venue for operating a business venture, this paper shows that access to microfinancee services becomes only necessary, but not sufficient for female empowerment. Based upon a game-theoretic model of activity choices by ex ante homogeneous women, we argue that conditioning well-trained women's access to credit to the adoption of high-productivity activities may enable MFIs to induce the emergence of networks of female entrepreneurs large enough to mitigate patriarchal practices that raise the costs of operating such activities in the informal economy.
    Keywords: Microfinance, female entrepreneurship, supermodular games
    JEL: D13 J16
    Date: 2006

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