Microfinance Performance and Informal Institutions: A Cross-country Analysis

Cornelis Hermes, Luminita Postelnicu

Research output: Working paperAcademic

Abstract

This paper investigates the relationship between the extent to which informal
institutions are developed at the country-level and the financial and social
performance of MFIs, using data from institutions active in 100 countries. Based
on the theoretical literature discussing the economic role of informal institutions
such as trust, beliefs, norms and values we hypothesize that microfinance is
more successful, both in terms of their financial and social aims, in countries with
stronger informal institutions. We test this hypothesis using various direct and
indirect measures of informal institutions and link them to measures of financial
and social performance of MFIs. Our empirical results are generally supportive to
our hypothesis.
Original languageEnglish
Place of PublicationBrussels
PublisherUniversite Libre de Bruxelles
Number of pages56
Publication statusPublished - 2015

Publication series

NameCEB working paper series
PublisherUniversite Libre de Bruxelles
No.15-032

Keywords

  • Microfinance, social capital, trust, norms, values, culture, financial performance, social performance

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