Is microfinance breaking new grounds?:A cross country empirical investigation of the performance of microfinance institutions

This thesis aims to enhance the understanding of microfinance institutions (MFIs) by empirically analyzing their performance in a cross-country setting. It focuses on three research projects, in which the first two analyze the relative performance of these institutions in a dual financial system where microfinance institutions co-exist with commercial banks. The third project analyzes the impact of different CEO attributes on the financial performance of MFIs. The findings of the thesis provide important insights and offer various implications to policymakers, regulators, and MFIs. Policymakers must begin to take steps to incorporate microfinancing into a country's mainstream financial system. The operations and branches of MFIs must be opened in places where they have a market niche or where commercial banks cannot support low-income borrowers. Additionally, MFIs could become more active with start-ups and small-scale enterprises, an operation that has the potential to boost economic growth. Furthermore, policymakers and regulators must introduce new technical ways such as mobile banking and virtual branch networks to minimize the operational cost of microfinance banks and enhance their penetration in remote areas. Likewise, policymakers and regulators should consider adopting systematic risk management techniques such as credit scoring, computerized databases of borrowers' credit histories, loan delinquency rates, and default records to increase the asset quality of these institutions. Finally, MFIs must consider the demographic characteristics when identifying and selecting suitable candidates for the position of CEO. Research findings indicate that MFIs that hire female CEOs, CEOs with business degrees, CEOs with domain-specific experience, and CEOs who are also the founders of MFIs are more likely to increase the financial performance of these institutions

Microfinance Institutions and Poverty Reduction: A Cross Regional Analysis

The alleviation of poverty is one of the most debated issues among the academicians and policy makers. From 1950s to 1980s the poverty reduction program has been based on increase the participation of poor into the economy by better macroeconomic performance. Though the poor part of population mostly engaged in informal sector1 is identified by researchers but has not become the part of economic models and government policy [Robinson (2001)]. Poverty reduction has been institutionalised in 1944 when World Bank was set up. The World Bank worked through governments and institutions by giving loans to developing countries called structural-adjustment programmes. These programmes were highly unsuccessful, created dependence on aid with little help to poor part of societies [Murduch (1999) and Diop, et al. (2007)]

The connectedness of oil shocks, green bonds, sukuks and conventional bonds

We analyze the impact of oil price shocks on three unique fixed income asset classes representing conventional bonds, Islamic bonds (sukuks) and green bonds by employing network dynamic connectedness framework. Our sample period ranges from May 1, 2009, to March 1, 2022, covering the aftermath of global financial crisis, subsequent boom and bust of oil markets and the COVID-19 pandemic. We document a sizable connectedness of oil price shocks with fixed income asset classes. We document oil demand and risk shocks\u27 role as main transmitters of spillover. Our findings have important implications for investors, policy makers and regulators

Volatility Linkages between Equity Markets of Pakistan, India, Singapore and Hong Kong: A GARCH BEKK Approach

The purpose of current study is to explore the volatility linkages between four Asian equity markets, which arePakistan (Karachi Stock Exchange), India (Bombay Stock Exchange), Hong Kong (Hang Sang Index) and Singapore (Strait Time Index). We estimate Multivariate GARCH BEKK model using weekly returns from January 2000 to August 2011.Direct evidences of linkages are found among all markets with respect to conditional mean returns and volatility.Own volatility spillover is found greater than cross volatility spillover in all emerging and developed economies.The insinuation of this study is that overseas investors may take advantage from the decrease of uncertainty by accumulating the stocks in the emerging markets to their investment portfolio

Network Connectedness of Environmental Attention—Green and Dirty Assets

This pioneering study demonstrates the nexus between the cryptocurrency environmental attention index and the return and volatility of both green and dirty assets. We employ a dynamic connectedness approach to document these dirty bonds and equities as the main transmitter of return spillover, whereas dirty equities are the main transmitter of volatility spillover. Environmental attention appears to have a stronger impact on equities than on bonds. Our results have important implications for investment, hedging, and policymaking

The Return and Volatility Connectedness of NFT Segments and Media Coverage: Fresh Evidence Based on News About the COVID-19 Pandemic

We study the relationship between return and volatility of non-fungible tokens (NFT) segments and media coverage during the outbreak of the COVID-19 pandemic in a connectedness framework. We document media coverage as a net transmitter of spillover for both the return and volatility of NFT segments. We find that NFTs representing the Utilities segment is a major transmitter of spillover. Our findings have important implications for portfolio managers, regulators, and policymakers

Dividend policy and earnings management: An empirical study of Pakistani listed companies

Dividend policy is one of the widely addressed topics in financial management. It is an important duty of a financial manager to formulate the company's dividend policy that is in the best interest of the company. Many a time financial managers are involved in earnings management practices with the intention of adjusting dividends. The present study has been carried out to scrutinize the effect of earnings management on dividend policy. The researchers have taken the data of 86 listed companies for the year 2004 to 2009. The researchers have measured the dividend policy by using dividend payout ratio while Modified Cross Sectional Jones Model (1995) has been employed to measure the earnings management. The results of the common effect model show that there is not any significant relationship among earnings management and dividend policy. Moreover, smaller companies are paying more dividends as compared to larger companies. This study reveals that involvement of managers is not for dividend policy. There might be some other motives behind the earnings management

The impact of financial and social performance of microfinance institutions on lending interest rate: A cross-country evidence

The present paper examines the impact of financial and social performance of microfinance institutions (MFIs) on lending interest rate. The paper has covered five-star-rated MFIs in all the six regions of the world individually and collectively for the period of 2006–2012. Data for 382 MFIs belonging to 70 countries around the world have been taken from the Microfinance Information Exchange (Mix Market). Financial performance is captured through return on assets, return on equity, and operational self-sufficiency, whereas social performance is measured through average loan size and number of credit clients. The lending interest rate is a weighted average of the interest rates actually received by the MFIs from their clients. The paper incorporated some control variables to capture variations in size, age, location, and infrastructure of MFIs. Panel data estimation techniques have been applied to find out the empirical association between the selected variables. Most of the results have shown that cost of funding, return on assets (ROA), and the number of credit clients have a significant positive impact on lending interest rate around the world. However, depth outreach as depicted by average loan size has significant inverse relation with lending interest rates. Moreover, results also highlight different factors that affect the productivity of MFIs around the world

What makes the difference? Microfinance versus commercial banks

We make a comparison of microfinance banks (MBs) and commercial banks (CBs) in terms of efficiency, business orientation, stability, and asset quality by analyzing a large sample of banks from 60 countries around the world. Our findings indicate that microfinance banks have higher intermediation, non-interest income, wholesale funding and liquidity, but lower efficiency and asset quality. These significant variations are influenced by smaller microfinance banks and are driven mostly to African and Latin American microfinance banks

Finance-Growth Nexus and Banking Efficiency: The Impact of Microfinance Institutions

This paper investigates the relative importance of microfinance institutions (MFIs) at both the macro (financial development, economic growth, income inequality, and poverty) and micro levels (efficiency of traditional commercial banks). We observe a significant impact on most of the fronts. MFIs’ participation increases overall savings (total bank deposits) and credit allocation (loans to private sector) in the economy. Their involvement enhances economic welfare by reducing income inequality and poverty. Additionally, their active presence helps to discipline the traditional commercial banks by subjecting them to more competition triggering higher efficiency