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2019-02-06 - Colloque/Présentation - communication orale - Anglais - 27 page(s)

Radermecker Laure, "High growth and portfolio deterioration: The case of microfinance" in 6th European Research Conference on Microfinance, Paris, France, 2019

  • Codes CREF : Economie des PVD (DI4375), Management (DI4360)
  • Unités de recherche UMONS : Economie et gestion de l'entreprise (W742)
  • Instituts UMONS : Institut de Recherche en Développement Humain et des Organisations (HumanOrg)
  • Centres UMONS : Microfinance (CERMI)

Abstract(s) :

(Anglais) In this study, we investigate whether loan growth in the microfinance sector affects the riskiness of microfinance institutions (MFIs), looking at 3 aspects in a dynamic perspective: losses, profitability, and solvency. Using data provided by a microfinance investment vehicle (MIV) on 294 MFIs in 64 countries in 6 world areas for the period 2008-2017, we test three hypotheses about the relation between abnormal loan growth and three characteristics of MFIs: portfolio at risk (losses), portfolio yield (interest income, profitability), and equity to total assets (solvency). We observe that abnormal loan growth tends to first reduce the portfolio at risk in the short term and to increase it in the long run. We also highlight that portfolio yield is negatively influenced by loan growth. Additionally, we point out, from our results, that capital ratio increases when the number of loans granted increases.