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Contribution Details

Type Journal Article
Scope Discipline-based scholarship
Title Outreach and performance of microfinance institutions: the importance of portfolio yield
Organization Unit
Authors
  • Julia Meyer
Item Subtype Original Work
Refereed Yes
Status Published in final form
Language
  • English
Journal Title Applied Economics
Publisher Taylor & Francis
Geographical Reach international
ISSN 0003-6846
Volume 51
Number 27
Page Range 2945 - 2962
Date 2019
Abstract Text In this paper, we examine the interaction between social outreach and financial return in microfinance. Running multivariate regression models and using 1,805 observations of microfinance institutions between 2004 and 2013, we find strong evidence suggesting that institutions with more social engagement – in terms of outreach to the poor – earn higher portfolio yields. We also find that measures of outreach are associated with increased operating expenses. As return figures are influenced by both costs and yield, and because both increase to a similar degree with the depth of outreach, these two effects lead to a zero sum result on return measures. This finding could explain why existing studies assessing the interaction between social outreach and different measures of financial performance in microfinance (such as return on assets/equity, operating expenses, operational self-sufficiency) have not produced consistent results.
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Digital Object Identifier 10.1080/00036846.2018.1564016
Other Identification Number merlin-id:17329
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