Is microfinance breaking new grounds? A cross country empirical investigation of the performance of microfinance institutions

Afsheen Abrar

Research output: ThesisPhD Thesis - Research external, graduation UT

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This thesis aims to enhance the understanding of microfinance institutions (MFIs) by empirically analyzing their performance in a cross-country setting. It focuses on three research projects, in which the first two analyze the relative performance of these institutions in a dual financial system where microfinance institutions co-exist with commercial banks. The third project analyzes the impact of different CEO attributes on the financial performance of MFIs. The findings of the thesis provide important insights and offer various implications to policymakers, regulators, and MFIs. Policymakers must begin to take steps to incorporate microfinancing into a country's mainstream financial system. The operations and branches of MFIs must be opened in places where they have a market niche or where commercial banks cannot support low-income borrowers. Additionally, MFIs could become more active with start-ups and small-scale enterprises, an operation that has the potential to boost economic growth. Furthermore, policymakers and regulators must introduce new technical ways such as mobile banking and virtual branch networks to minimize the operational cost of microfinance banks and enhance their penetration in remote areas. Likewise, policymakers and regulators should consider adopting systematic risk management techniques such as credit scoring, computerized databases of borrowers' credit histories, loan delinquency rates, and default records to increase the asset quality of these institutions. Finally, MFIs must consider the demographic characteristics when identifying and selecting suitable candidates for the position of CEO. Research findings indicate that MFIs that hire female CEOs, CEOs with business degrees, CEOs with domain-specific experience, and CEOs who are also the founders of MFIs are more likely to increase the financial performance of these institutions.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • University of Twente
  • Kabir, Rezaul, Supervisor
Award date9 Jul 2021
Place of PublicationEnschede
Print ISBNs978-90-365-5207-3
Publication statusPublished - 9 Jul 2021


  • Microfinance
  • Financial development
  • Economic welfare
  • Asset quality
  • Financial performance
  • Stability
  • Business models
  • Efficiency
  • CEOs attributes
  • Commercial banks
  • Banking efficiency


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