DOCTORAL THESIS - CONGRATULATIONS to KNAR KHACHATRYAN
Managing Microfinance Institutions: Liking Performance with Service and Capital Portfolios
Abstract: In the past three decades development finance has been viewed as a powerful tool to alleviate poverty. In this respect, microfinance has gained considerable attention serving over 150 million micro-entrepreneurs across the world. Recent developments in the industry encourage microfinance institutions (MFIs) to offer wide-ranging services, such as microsavings, microinsurance, remittances, mobile banking etc. One of the main pillars of this trend has become MFIs increasing interest in the expansion into the savings market to reach more poor clients as well as to lower operational and funding costs by attracting presumably cheaper deposits.
The focus of this dissertation is on three emerging issues associated with the development of the microfinance sector: incentive mechanisms to address contract enforcement and screening problems, performance of MFIs though the lens of combined microfinance services (credit plus savings), and performance of MFIs though the lens of capital structure.
Building on a theoretical model we show that savings could enhance repayment and serve as a better tool for screening borrowers. Moreover, our empirical findings show that offering savings services allows MFIs to increase productivity and outreach without affecting their efficiency. Finally, the results of the third chapter suggest that in most cases the type of capital used is associated with the performance preferences of the stakeholder it represents and different elements of the capital funding have different impact on MFIs efficiency and outreach.