Does Regulatory Supervision Curtail Microfinance Profitability and Outreach?

Cull, Robert ; Demirgü ; ç ; -Kunt, Asli ; Morduch, Jonathan

关键词: ACCESS TO FINANCE;    ACCOUNTING;    ADMINISTRATIVE COSTS;    AFFILIATE;    ASSET MANAGEMENT;   

DOI  :  10.1596/1813-9450-4948
RP-ID  :  WPS4948

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Regulation allows microfinanceinstitutions to evolve more fully into banks, particularlyfor institutions aiming to take deposits.But there arepotential trade-offs.Complying with regulation andsupervision can be costly. The authors examine theimplications for the institutionsprofitability and theiroutreach to small-scale borrowers and women. The tests drawon a new database that combines high-quality financial dataon 245 of the world s largest microfinance institutions withnewly-constructed data on their prudential supervision.Ordinary least squares regressions show that supervision isnegatively associated with profitability. Controlling forthe non-random assignment of supervision via treatmenteffects and instrumental variables regressions, the analysisfinds that supervision is associated with substantiallylarger average loan sizes and less lending to women than inordinary least squares regressions, although it is notsignificantly associated with profitability. The pattern isconsistent with the notion that profit-oriented microfinanceinstitutions absorb the cost of supervision by curtailingoutreach to market segments that tend to be more costly perdollar lent. By contrast, microfinance institutions thatrely on non-commercial sources of funding (for example,donations), and thus are less profit-oriented, do not adjustloan sizes or lend less to women when supervised, but theirprofitability is significantly reduced.