The financial crisis and microfinance

We use detailed panel data to demonstrate that the current economic and financial crisis raises MFIs financing costs, reduces the availability of funding, changed demand for loans and implies a deterioration of clients’ repayment behavior. We search for structural breaks in the times series of MFI performance indicators related to profitability, growth and portfolio quality. All performance indicators experience a negative shift. The timing of these shifts differs across the performance indicators and there are important geographical differences. Importantly, the extent of the impact depends on the funding structure of MFIs. MFIs attracting savings are significantly less affected.