How Does Competition Affect the            Performance of MFIs? Evidence from Bangladesh

Badruddoza, Syed; Khandker, Shahidur R.; Koolwal, Gayatri B.

How Does Competition Affect the Performance of MFIs? Evidence from Bangladesh

Autores

Badruddoza, Syed

Khandker, Shahidur R.

Koolwal, Gayatri B.

Editor

World Bank, Washington, D.C.

Descripción

Over the past 20 years, Bangladesh has witnessed strong competition among microfinance institutions. Using program-level panel data from 2005-2010, this paper studies the microfinance institutions' recent competitive roles in their pricing of products, targeting strategies and portfolio shifts, as well as their ability to recover loans. The findings do not support the view that newer microfinance institutions are less risk-averse in their targeting, or that increased borrowing among households due to microfinance institution competition has lowered recovery rates. There is also a considerable urban-rural distinction; although newer microfinance institutions tend to attract riskier clients in urban areas, the opposite is true in rural areas. Loan recovery rates are also the highest among the newest microfinance institutions for women in rural areas, suggesting that microfinance institutions may offer distinct products in these areas to attract better-risk clients. The portfolio of newer microfinance institutions also has a greater share of lending for agriculture, and fewer savings products.

Palabras clave

ACCESS TO MARKETS, ACCOUNTING, ADVERSE SELECTION, AGRICULTURAL CREDIT, ASYMMETRIC INFORMATION, AVAILABILITY OF CREDIT, BANK POLICY, BORROWER, BRANCH, BRANCHES, CENTRAL BANK, CLIENT BASE, COLLATERAL, COMMERCIAL BANKS, COMMERCIAL INVESTMENT, COMPETITIVE MARKET, CONSTRAINTS ON BORROWERS, CONSUMER PROTECTION, COOPERATIVES, CREDIT ACCESS, CREDIT BUREAU, CREDIT BUREAUS, CREDIT MARKET, CREDIT MARKETS, CREDIT PRODUCTS, CREDIT PROGRAMS, CREDIT SCORING, CROP LOANS, DEBT, DEFAULT RATES, DEFAULTS, DEMAND FOR CREDIT, DEVELOPING COUNTRIES, DISBURSEMENT, DISBURSEMENTS, DIVERSIFICATION, ECONOMIC CRISIS, EXPANSIONS, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIARIES, FINANCIAL REGULATION, FINANCIAL STUDIES, GRAMEEN BANK, GROUP SAVINGS, GROWTH RATE, HOUSING, HOUSING LOANS, INCOME, INCOMES, INDEBTEDNESS, INFORMATION ON BORROWERS, INSTITUTIONAL FUNDS, INSTRUMENT, INTEREST RATE, INTEREST RATES, INTEREST RATES FOR LOANS, INTEREST RATES ON LOANS, INTERNATIONAL BANK, JOINT LIABILITY, LEGISLATION, LENDER, LENDERS, LENDING INSTITUTIONS, LIABILITY, LITERACY, LOAN, LOAN CONTRACTS, LOAN DEFAULTS, LOAN PARTICIPANTS, LOAN RECOVERY, LOAN REPAYMENT, LOAN REPAYMENTS, LOAN SIZES, MARKET ENTRY, MARKET INFORMATION, MFI, MICRO-CREDIT, MICROBANKING, MICROCREDIT, MICROFINANCE, MICROFINANCE INDUSTRY, MICROFINANCE INSTITUTION, MICROFINANCE INSTITUTIONS, MICROFINANCE LENDING, MICROFINANCE MARKET, MICROFINANCE MARKETS, MICROFINANCE ORGANIZATIONS, MICROFINANCE PROGRAM, MICROFINANCE PROGRAMS, MICROFINANCE REGULATION, MICROLENDING, MICROLOANS, MONEYLENDERS, NET SAVINGS, NEW ENTRANTS, OPERATING COSTS, OPERATING EXPENSES, OUTREACH, PARTICULAR COUNTRY, PARTY, PENALTIES, POOL OF BORROWERS, POOR HOUSEHOLDS, PORTFOLIO, PORTFOLIOS, POVERTY ALLEVIATION, PRIVATE BANKS, PROFITABILITY, PUBLIC POLICIES, PUBLIC POLICY, RAPID EXPANSION, REGULATORY AGENCY, REGULATORY AUTHORITY, REMOTE AREAS, REPAYMENT, REPAYMENT BEHAVIOR, REPAYMENT SCHEDULE, RETURN, RETURNS, RISKY BORROWERS, RURAL BORROWERS, SAVINGS RATES, SMALL BUSINESS, SMALL BUSINESS LOANS, SUBSIDIARY, SUSTAINABLE MICROFINANCE, TRANSACTION, TRANSACTION COSTS, WHOLESALE FUNDING