nep-mfd New Economics Papers
on Microfinance
Issue of 2017‒11‒12
four papers chosen by
Olivier Dagnelie
Université de Caen

  1. Refinancing and Efficiency of Microfinance Institutions in Niger By Ali Hadizatou
  2. Sustainability of Microfinance Institutions in Togo By Abalo Kodjo
  3. Analysis of the Cost-Efficiency of Microfinance Institutions in the West African Economic Monetary Union Area By Leadaut Edith Prisca Togba
  4. Behavioral Banking: A Theory of the Banking Firm with Time-Inconsistent Depositors By Carolina Laureti; Ariane Szafarz

  1. By: Ali Hadizatou
    Abstract: AbstractThe aim of this study was to establish the effect of refinancing resources (deposits, loans, grants) on the efficiency of 24 microfinance institutions (MFIs) in Niger over the 2005-2008 period. The study’s hypothesis was tested using a Translog function that was estimated in the form of a system with equations of cost-sharing of inputs. The outreach of the activities of the MFIs studied was established by using a descriptive analysis. A Principal Components Analysis revealed that the independent MFIs had recourse to deposits, loans, and grants more often than those affiliated to unions. Econometric results showed that the MFIs in Niger were not efficient. But they also showed that the use of deposits, physical capital and human capital led to a drop in the charges incurred by those MFIs. They further showed while deposits could replace loans and grants, the latter two could not be substituted for each other. The study also found that the social performance of the MFIs in Niger was low, due to the fact that their service outlets were still being set up and were located mostly in large towns. Men formed the majority of customers targeted by the MFIs, and these granted loans mainly to customers living in urban areas. A slowdown in the MFIs’ loan granting was observed in all the country’s regions, which had the effect of lowering the MFIs’ costs related to economies of scale. Finally, the study found that there was a link between MFI efficiency and social performance. Key words:efficiency, social performance, microfinance, refinancing, Niger
    Date: 2017–05
  2. By: Abalo Kodjo
    Abstract: For several years now, microfinance has become an important tool in the fight against poverty. That is why this study sought to analyse the sustainability and success of the microfinance institutions (MFIs) in Togo, and to identify explanatory factors for this sustainability and success. The study is based on data obtained from 63 MFIs,and covering the period from 2002 to 2008. It used two indicators to measure MFI financial sustainability: the operational self-sufficiency (OSS) and the subsidy-dependence index (SDI). It found that, overall, the MFIs studied were not financially high-performing and still depended on subsidies: their OSS was, on average, below acceptable standards. Several factors were found to be statistically significant in terms of explaining the variation in those MFIs’ performance. Among them are the MFIs’ number of beneficiaries, the number of years they have been in business, their labour productivity, observance of prudential rules, and the existence of a relationship between the MFIs and banks. Key words:Sustainability, operational self-sufficiency (OSS), subsidy-dependence index (SDI), Microfinance institutions (MFIs).
    Date: 2016–10
  3. By: Leadaut Edith Prisca Togba
    Abstract: The cost-efficiency of microfinance institutions (MFIs) has emerged as an issue crucial to their survival and the continuity of their services. The present study uses the stochastic frontier method to analyse the levels and determinants of cost-efficiency of a sample of microfinance institutions operating from the West African Economic and Monetary Union (WAEMU) area. For the 2000–2008 period, these MFIs were found to have functioned in an ineffective way in terms of minimizing their costs. Factors influencing cost-efficiency include the age and type of MFI. The study’s results also reveal that the number of female borrowers, the MFI’s financial performance, level of capitalization, geographical location, and size were explanatory factors for the cost-efficiency of the MFIs studied.Key Words:Cost-efficiency; Microfinance; Stochastic frontier; WAEMU
    Date: 2016–09
  4. By: Carolina Laureti; Ariane Szafarz
    Abstract: Time-consistent savers require compensation for holding savings accounts that are illiquid rather than liquid. In equilibrium, banks subject to reserve requirements for liquidity management are keen to offer that compensation. Yet the presence of time-inconsistent agents, who value illiquidity as a commitment device to discipline their future selves, reshuffles the deck. Our model determines the equilibrium liquidity premium––the interest spread between illiquid and liquid deposits––offered by a bank to a pool comprising known proportions of time-consistent and time-inconsistent savers, under the assumption that individual time consistency or inconsistency is private information. We characterize pooling and separating equilibria, and uncover two asymmetric externalities: time-inconsistent agents obtain a higher premium than they would request ex ante for holding illiquid accounts, while time-inconsistent agents make it harder for their time-consistent counterparts to get illiquid accounts. We also deliver insights on reserve requirements for banking regulation.
    Keywords: Behavioral economics; banking; savings account; liquidity premium; time inconsistency; commitment; quasi-hyperbolic discounting.
    JEL: G21 E21 D53 D91 G28
    Date: 2017–10–26

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