Abstract
We study the impact of loan approval decentralization on MFI portfolio quality and outreach, and the effects of alignment mechanisms when loan officers combine information production and decision functions. Using an independently pooled cross-section of 374 MFI-year observations for 280 MFIs in 70 countries, we find that effective incentive schemes and internal control systems help mitigate agency problems within MFIs, and thus increase the outreach of MFIs without altering the quality of their loan portfolio. Our results are robust after controlling for alternative portfolio risk and outreach measures, outreach threshold effect, crisis period, selection bias and endogeneity.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
