Do for-profit microfinance institutions achieve better financial efficiency and social impact? A generalised estimating equations panel data approach

Abstract

This article contributes to the literature by investigating the potential benefits of the commercialisation of microfinance. Two types of possible improvements of pursuing profitability are investigated using a comprehensive longitudinal data set spanning 15 periods and covering 456 microfinance institutions (MFIs). The analyses are done using a generalised estimating equations framework in order to correct for the correlations within each cluster. The results show that we cannot support the hypothesis that operating more financially efficient is associated with being registered as for-profit MFIs. With respect to social impact, a lower depth of outreach and less outreach to women are associated with for-profit registration.