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on Microfinance |
| By: | Tehulu, Tilahun Aemiro |
| Abstract: | This research explores the key factors that drive the high interest rates observed in microfinance institutions (MFIs) by focusing on the effects of firm-specific characteristics in the context of MFIs from Sub-Saharan Africa (SSA). The study utilizes data from 129 MFIs in SSA from 2004 to 2018. Random-effects GLS regression is employed as our main method of data analysis. The study unveils that operating inefficiency and capitalization drive interest rates positively, whereas higher loan intensity and loan officer productivity are negatively associated with microcredit interest rates. Moreover, we find that MFIs with higher credit risk in the previous period tend to reduce interest rates in the current period, possibly to reduce the total debt burden for the borrowers and improve repayment rates, or alternatively, due to shifts to more creditworthy borrowers. Nevertheless, our study is unable to find any evidence of discrimination against women via charging higher interest rates. The results are robust regardless of whether the MFIs are large-scale or small- and medium-scale MFIs, except for loan officer productivity and credit risk, which hold valid only for small- and medium-scale MFIs but not for large-scale MFIs. Our findings have several considerable implications for how MFIs could provide more affordable microcredit for the poor. More specifically, MFI managers need to reduce operating inefficiencies, invest more of their assets in loan portfolios, improve loan officer productivity, and expand the scale of MFI operations through debt leverage to reduce interest rates. |
| Keywords: | Capitalization, Interest rates, Operating efficiency, Loan intensity, Microcredit pricing, Productivity, Microfinance institutions, Sub-Saharan Africa |
| JEL: | E43 G10 G21 |
| Date: | 2026–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129046 |
| By: | Mustafa Disli (HBKU - Hamad Bin Khalifa University [Doha, Qatar]); Shakir Jalaly (Afghan International Islamic University [Kabul]); Laurent Weill (EM Strasbourg - École de Management de Strasbourg = EM Strasbourg Business School - UNISTRA - Université de Strasbourg, LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg, UK - Univerzita Karlova [Praha, Česká republika] = Charles University [Prague, Czech Republic] = Université Charles [Prague, Republique tchèque]) |
| Abstract: | This study explores how gender is associated with microfinance loan performance in Afghanistan, a conservative and conflict-affected society. We use data from over 9500 borrowers across Taliban- and government-controlled areas for the period from January 2017 to February 2020, before the 2021 Taliban takeover. We analyse how borrower and loan officer gender are related to loan outcomes. Contrary to prevailing literature, our findings reveal that female borrowers exhibit lower loan performance compared to male borrowers, which we attribute to structural barriers such as restricted mobility, limited business opportunities and poor access to education. Female loan officers are associated with higher loan performance on average. A key finding is evidence for a matching channel: female borrowers are substantially less likely to default when paired with female loan officers, and this effect is particularly pronounced in government-controlled areas. The results highlight the value of gender-sensitive staffing and borrower-officer assignment policies for microfinance in challenging environments. |
| Keywords: | Afghanistan | conflict | gender | loan officers | loan performance | microfinance JEL Classification: G21 G51 J16, Afghanistan | conflict | gender | loan officers | loan performance | microfinance JEL Classification: G21, G51, J16 |
| Date: | 2026–04–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05620355 |
| By: | Aroon Narayanan; Tavneet Suri; Prashant Bharadwaj |
| Abstract: | We study Kenya’s 2016 interest-rate regulation, which capped bank lending rates but left one digital platform, called M-Shwari, exempt on the lending side while imposing a deposit-rate floor across all lenders in the market. Using borrower-level administrative data, survey data, and an RD around the implementation date, we show three main results. First, lending on the exempt platform rose, but with the safest borrowers substituting away toward cheaper capped credit. Second, riskier borrowers increase their savings to build up their credit limits. Third, on the supply side, M-Shwari raises the limits for the safest borrowers in an attempt to retain them. We build and estimate a simple model of screening and credit limit-setting to interpret these reallocations and compute welfare. The observed carve-out for M-Shwari preserves access for high-risk borrowers but yields a slight aggregate welfare decline relative to pre-policy. However, a uniform (across all lenders) interest rate cap counterfactual generates substantially larger welfare losses by entirely eliminating credit for high-risk borrowers. |
| JEL: | G51 L13 O55 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35166 |