IDEAS home Printed from https://ideas.repec.org/a/wly/jintdv/v31y2019i5p393-410.html
   My bibliography  Save this article

Does the Geographic Expansion of Microfinance Branches Affect Profitability? Panel Data Evidence from Sub‐Saharan Africa

Author

Listed:
  • Sydney Chikalipah

Abstract

Notwithstanding the recent banking innovations, like mobile money services, microfinance institutions still rely on brick‐and‐mortar branches to provide financial services to the poor in the sub‐Saharan Africa (SSA) region. Moreover, the number of microfinance branches has continued to increase remarkably since the early 2000s. In light of that, we study the influence of geographic expansion of the branches network on the profitability of 343 microfinance institutions operating in 36 countries of SSA over the period 2003 to 2012. By exploiting the ordinary least squares and generalised method of moments approaches, we found that the geographic expansion of microfinance branches is positively associated with an increase in profitability. Conspicuously, the policy implication regarding this study's findings is that extending financial services to the poor, via branch expansion, is optimal for microfinance institutions operating in SSA. Nevertheless, the branching strategy must be accompanied by operational efficiency to safeguard the advantages of economies of scale gained through the scale‐up of the branch network. © 2019 John Wiley & Sons, Ltd.

Suggested Citation

  • Sydney Chikalipah, 2019. "Does the Geographic Expansion of Microfinance Branches Affect Profitability? Panel Data Evidence from Sub‐Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 31(5), pages 393-410, July.
    • Handle: RePEc:wly:jintdv:v:31:y:2019:i:5:p:393-410
    DOI: 10.1002/jid.3410
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/jid.3410
    Download Restriction: no
    File URL: https://libkey.io/10.1002/jid.3410?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:jintdv:v:31:y:2019:i:5:p:393-410. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/journal/5102/home .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.