Banks and Microbanks

Robert Cull, Asli Demirgüç-Kunt, Jonathan Morduch

Research output: Contribution to journalArticle

Abstract

We combine two datasets to examine whether the presence of banks affects the profitability and outreach of microfinance institutions. We 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 group lending methods favored by microfinance NGOs). We consider 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 we fail to find strong support for these alternative hypotheses.

Original languageEnglish (US)
Pages (from-to)1-53
Number of pages53
JournalJournal of Financial Services Research
Volume46
Issue number1
DOIs
StatePublished - Aug 2014

Keywords

  • Banks
  • Depository institutions
  • Micro finance institutions
  • Mortgages

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Banks and Microbanks'. Together they form a unique fingerprint.

  • Cite this