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Impact of asset size on performance and outreach using panel quantile regression with non-additive fixed effects

Author

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  • Sandra Kendo

    (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Josephine Tchakounte

Abstract

This study focuses on the impact of asset size on financial performance and outreach. More specifically, we determine whether an increase in asset size is more relevant for microfinance institutions with low performance than for those with high performance. To achieve this goal, we applied a panel quantile approach with non-additive fixed effects that helps to organize our microfinance sample into subgroups with similar performance levels. The results reveal that an increase in asset size leads to increased profitability, with a greater impact for microfinance institutions that have poor or low-end profitability levels than for those with satisfactory levels. For outreach, we found that an increase in asset size positively impacts the average loan and the number of active borrowers, but reduces the percentage of female borrowers in the client portfolio. An increase in asset size reduces the percentage of female borrowers more for MFIs that target women less. Conversely, for MFIs that already have a high level of female borrowers, an increase in asset size reduces the percentage of female borrowers less. In other words, increasing asset size drives out female borrowers from the client portfolio, and this driving-out effect is greater for MFIs targeting fewer female borrowers.

Suggested Citation

  • Sandra Kendo & Josephine Tchakounte, 2021. "Impact of asset size on performance and outreach using panel quantile regression with non-additive fixed effects," Post-Print hal-03268896, HAL.
  • Handle: RePEc:hal:journl:hal-03268896
    DOI: 10.1007/s00181-021-02057-9
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    Cited by:

    1. Kendo, Sandra & Tchakounte, Josephine, 2022. "The drivers of the financial integration of microfinance Institutions: Do financial development, agency costs and microfinance performance matter?," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 128-142.
    2. Sandra Kendo & Josephine Tchakounte, 2022. "The drivers of the financial integration of microfinance Institutions: Do financial development, agency costs and microfinance performance matter?," Post-Print hal-04529938, HAL.

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