Outreach and performance of microfinance institutions: a panel analysis

Abstract

Using a panel of 764 microfinance institutions (MFIs) from 87 countries, this study analyses the possible trade-off between outreach and performance and shows that greater depth of outreach has a positive impact on the financial performance of an MFI. The empirical results of this study should dispel the widely held apprehension that the recent emphasis on attainment of financial sustainability by the MFIs could seriously impair their outreach efforts and shows that outreach to the poor can actually bolster financial performance.

Keywords:

• microfinance institution
• depth of outreach
• financial performance
• panel data

JEL Classification:

• G29
• O12
• O16