Banks and Microbanks

Using two new datasets, the authors examine whether the presence of banks affects the profitability and outreach of microfinance institutions. They find evidence that competition matters. Greater bank penetration in the overall economy is associated with microbanks pushing toward poorer markets, as reflected in smaller average loans sizes and greater outreach to women. The evidence is particularly strong for microbanks relying on commercial funding and using traditional bilateral lending contracts (rather than the group lending methods favored by microfinance nongovernmental organizations). The analysis considers plausible alternative explanations for the correlations, including relationships that run through the nature of the regulatory environment and the structure of the banking environment; but it fails to find strong support for these alternative hypotheses.

Bibliographic Details

Main Authors:	Cull, Robert, Demirgüç-Kunt, Asli, Morduch, Jonathan
Language:	English
Published:	2009-10-01
Subjects:	ACCESS TO CREDIT, ACCESS TO FINANCIAL SERVICES, AFFILIATE, AGENCY PROBLEMS, BALANCE SHEET, BANK BRANCH, BANK BRANCH NETWORKS, BANK BRANCHES, BANK ENTRY, BANK INTEREST RATE, BANK LENDERS, BANK LENDING, BANK LOAN, BANK MERGERS, BANK POLICY, BANKING CONCENTRATION, BANKING INDUSTRY, BANKING SECTOR, BANKING SECTOR ASSETS, BANKING SECTOR DEVELOPMENT, BANKING SECTOR EFFICIENCY, BANKING SECTOR OUTREACH, BANKING SECTORS, BANKING SERVICES, BANKING SYSTEM, BANKING SYSTEMS, BANKS, BORROWER, BORROWING, BRANCH NETWORK, BROAD ACCESS, CAPITAL COSTS, CASH FLOWS, CENTRAL BANKS, CHARTER, COLLATERAL, COLLATERAL REQUIREMENTS, COMMERCIAL BANKING, COMMERCIAL BANKS, COMMERCIAL BORROWING, COMMERCIAL INVESTMENT, COMMERCIAL LAW, COMPANY, CREDIT CONSTRAINTS, CREDIT MARKET, CREDIT SCORING, CREDITS, CREDITWORTHINESS, DEFAULT RATES, DEPOSIT, DEPOSIT ACCOUNTS, DEPOSIT INTEREST, DEPOSITS, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DUMMY VARIABLE, DUMMY VARIABLES, ECONOMIC ACTIVITY, ECONOMIC GROWTH, ECONOMIC THEORY, ENDOWMENTS, ENROLLMENT, ENTERPRISE DEVELOPMENT, EXPANSION, FEMALE CLIENTS, FINANCIAL ACCESS, FINANCIAL CRISES, FINANCIAL DATA, FINANCIAL DEPTH, FINANCIAL DEVELOPMENT, FINANCIAL INNOVATIONS, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIATION, FINANCIAL PERFORMANCE, FINANCIAL RATIOS, FINANCIAL SELF-SUFFICIENCY, FINANCIAL SERVICES, FINANCIAL STATEMENTS, FINANCIAL SUSTAINABILITY, FINANCIAL SYSTEMS, FINANCING OBSTACLES, FIRMS, FLEXIBLE FINANCING, FOREIGN BANK, FOREIGN BANK ENTRY, FOREIGN BANKS, FORMAL BANKS, FORMAL FINANCIAL SECTOR, GDP, GREATER CREDIT AVAILABILITY, GROSS DOMESTIC PRODUCT, GROUP LENDING, GROUP LOANS, GROWTH RATE, HIGHER EDUCATION LEVELS, ID, INCOME STATEMENTS, INDEBTEDNESS, INFLATION, INFLATION RATE, INITIAL PUBLIC OFFERING, INSTITUTIONAL DEVELOPMENT, INTEREST INCOME, INTEREST RATE, INTEREST RATE SPREAD, INTEREST RATE SPREADS, INTEREST RATES, INTEREST RATES ON LOANS, INTERNATIONAL BANK, IPO, JOINT LIABILITY, LABOR COSTS, LAISSEZ FAIRE, LENDER, LENDERS, LENDING PRACTICES, LEVEL OF REPAYMENT, LINES OF CREDIT, LOAN, LOAN BALANCE, LOAN CONTRACTS, LOAN OFFICER, LOAN OFFICERS, LOAN REPAYMENT, LOAN SIZE, LOAN SIZES, LOANS TO INDIVIDUAL, LOANS TO INDIVIDUALS, LOCAL MARKET, LONG-TERM LIABILITIES, LOW-INCOME BORROWERS, MACROECONOMIC CONTEXT, MACROECONOMIC ENVIRONMENT, MARKET COMPETITION, MARKET SIZE, MFI, MFIS, MICROBANKING, MICROFINANCE, MICROFINANCE INDUSTRY, MICROFINANCE INSTITUTION, MICROFINANCE INSTITUTIONS, MICROFINANCE LOAN, MICROFINANCE LOANS, MICROFINANCE MARKET, MICROFINANCE ORGANIZATIONS, NEW ENTRANTS, NEW MARKET, NON-PERFORMING LOANS, NONGOVERNMENTAL ORGANIZATIONS, OPERATING EXPENSES, ORGANIZATIONAL STRUCTURE, OUTREACH, OWNERSHIP STRUCTURE, PER CAPITA INCOME, POLITICAL ECONOMY, POOL OF BORROWERS, PORTFOLIO, PORTFOLIO QUALITY, PORTFOLIOS, PRIVATE CREDIT, PRODUCTIVITY, PROFITABILITY, PROFITABILITY MEASURES, PRUDENTIAL SUPERVISION, PURCHASING POWER, PURCHASING POWER PARITY, REAL GDP, REGIONAL DUMMIES, REPAYMENT, REPAYMENT RATES, RESERVES, RETURN, RETURN ON ASSETS, RULE OF LAW, SAVINGS, SHARE OF ASSETS, SMALL BANKS, SMALL BORROWERS, SMALL BUSINESS, SMALL BUSINESS CREDIT, SMALL BUSINESS LENDING, SMALL BUSINESS LOANS, SMALL BUSINESSES, SMALL ENTERPRISE, SMALL FIRM, SMALL FIRM FINANCE, SMALL FIRMS, SMALL LOANS, SOFT LOANS, SOLIDARITY GROUP LENDING, SOURCES OF FINANCE, SOURCES OF FUNDS, TRANSITION COUNTRIES, VILLAGE, WOMEN BORROWERS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091014140231 https://hdl.handle.net/10986/4270
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