Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156199
Authors: 
Arnold, Lutz G.
Booker, Benedikt
Dorfleitner, Gregor
Röhe, Michaela
Year of Publication: 
2016
Series/Report no.: 
BGPE Discussion Paper 162
Abstract: 
This paper presents a model of the complete microcredit financing chain investor -> MIV -> MFI -> micro-borrower, in which social-minded MIVs provide funds only to those MFIs which do not exploit their bargaining power towards micro-borrowers. The MFIs with the highest bargaining power do not use MIV capital, since eschewing their market power is most costly for them. Consistent with this prediction of the theoretical model, we find empirically that the net interest margin, as a measure of MFI market power, negatively affects the likelihood of using MIV finance. This lends support to the view that social criteria play an effective role in MIVs' investment policies, thereby also impacting MFIs' lending behavior.
Subjects: 
microfinance
microfinance investment vehicles
social returns
JEL: 
G21
Document Type: 
Working Paper

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