La planificación preoperatoria digital hoy en día

Prior to the financial crisis, most academic literature focused on the client- and micro-levels of microfinance impact (Milana and Ashta, 2012). The reasons for this were two-fold: one, the given primary use of microfinance as a development tool aimed at reducing poverty, making the client outcome a natural key aspect in the evaluation microfinance efficiency. Two, data in microfinance has been notoriously unreliable, to the point where even today reliable country-level analyses are hard to come by, especially if the approach is quantitative (see, for example Cull et al, 2007).

Over the past few decades, available data for microfinance research has significantly improved in quality, enabling better-founded studies both in terms of scale and scope. However, while the impact debate has run hot for a while now, not much has been written with regard to the macroeconomic impact of microfinance on the financial health of the society they operate in. Generally, microfinance is still often considered separate from traditional entrepreneurial finance, and isolated from the rest of the financial structure (Milana and Ashta, 2012).

Some research, such as Ahlin et al., looks at the impact of the general financial context on the performance of MFIs, and finds that the economic health of the surrounding environment does impact the performance of the MFI. The authors find that MFIs are more likely to cover their costs if macroeconomic growth is strong, and that MFIs embedded in more developed financial systems have lower operating costs, lower interest rates and lower default rates (Ahlin et al., 2011).

However, as microfinance begins to move further into the mainstream financial market, it becomes increasingly important to understand not just the level of robustness of microfinance institutions and how they respond to external interference, but also to what degree they in turn have a macroeconomic effect, whether they are able to fulfil the same function as traditional financial intermediaries, and how they potentially impact the surrounding environment.

The evidence of the impact of microfinance institutions is mixed, and numerous studies find both positive and negative correlations. Some studies find empirical evidence suggesting that while small loans yield high returns, these decrease with higher capital investments (de

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Mel et al., 2008). Others find evidence of poverty reduction, but more so for non- production loans than production loans, and with larger impact in rural than urban regions (Imai et al., 2012).

Since the crisis of 2008, interest in the degree of robustness displayed by microfinance intermediaries has increased significantly. Prior to 2007, it was believed that MFIs were only mildly affected by shocks in the mainstream financial market and the macroeconomic environment in general (di Bella, 2011). This was affirmed by the negligible impact of the 2001 crisis, but data was scarce and often unreliable (e.g. Cull et al., 2009b).

The financial crisis of 2008 brought a sobering and rather dramatic stop to the explosive growth previously evident in both the number of MFIs emerging and number of loans extended pre-crisis. Growth in the microfinancial sector was subsequently slowed additionally by a general decline in available funds for development initiatives (Ngo, 2012:175). However, while the general growth of microfinance has slowed down significantly, some newer research suggests that micro-businesses with access to microfinance loans are able to withstand significant shock better than those without (Krauss and Walter, 2009; Gonzalez, 2011; Olu, 2009; Oluyombo, 2011). Other research, e.g. a study of the East-Asian crisis in 1997, suggests that microfinance institutions are able to survive financial crises on par with, and sometimes better than, traditional financial intermediaries (Patten et al., 2001:1066).

The ability of microfinance to withstand financial uncertainty relies on prudent financial management within the individual MFIs, and a continued effort to support the development of the external framework within which the MFIs operate (di Bella, 2011).

A more negative outlook on the macroeconomic impact of microfinance is presented by Adams and Raymond (2008). The authors argue that the macroeconomic benefits of growth, reduced poverty and the stability of the agricultural sector, have been vastly exaggerated. They argue that the global amount of funding funnelled into the sector is unknown, and that the industry is fragmented and data is often unreliable. Because we do not know the nature and size of the funding, they state that we cannot know the real impact on poverty levels, and proceed to argue that without subsidies, 90% of all MFIs would cease to exist (Adams and Raymond, 2008). This is supported by a number of other studies, which find that the

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real impact of microfinance and microcredit on overall development is hard to identify (e.g. Morduch, 1999a and 1999b; Sharma and Buchenreider, 2002 and Armendáriz and Morduch, 2010).

Other academics refute this, arguing that the fundamental economic key to understanding the impact of microfinance, is its ability to create access to liquidity for customers, who would otherwise have remain unbanked (Milana and Ashta, 2012). Like ordinary finance, microfinance is an approach which connects savers with investors, enabling investments in projects which would otherwise have been deemed too risky. Through innovative lending strategies, the industry thus manages to create new liquidity for an underserviced market, and reach customers without access to the traditional financial market. Bauer et al, note that in addition to increasing access to finance for the unbanked, microfinance institutions were an innovative institutional approach to overcoming agency issues usually associated with asymmetric information (Bauer et al., 2012).

3.3.1. The Regulatory Framework

While the ability of microfinance institutions to help alleviate poverty and provide access to capital for previously unbanked is relatively well covered by a number of studies, there is an increased focus on the importance of a well-functioning regulatory framework to guide microfinance institutions.22 Microfinance can work, but it needs the right conditions to do so –and if they are not in place, recent events show that the results can be disastrous (Lapenu and Zeller, 2002; Milana and Ashta, 2012). The increased diversity in organizational approaches, strategies and mission statements, combined with the rapid expanse of the sector, has made it clear that a better understanding of the impact of regulation and policy approaches has become increasingly important. Furthermore, the lack of consensus about appropriate ways to measure both its social and financial performance, has made it difficult to evaluate the behaviour and performance of microfinance institutions, and with it, nearly impossible to make recommendations for prudent regulatory policies (Cull et al., 2009b; Milana and Ashta, 2012).

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The nature of a prudent regulatory framework is closely linked with the debate outlined previously, on whether microfinance fundamentally is a social tool to reduce poverty, or a financial niche market. In the previous case of Compartamos, the interest rates were severely criticised for being significantly higher than needed to ensure future growth. This has been the case for a number of other large commercial MFIs (Akula, 2010).

Worse, in certain regions, the lack of prudent regulation and oversight of microfinancial activity, was revealed to push poor people into further debt, rather than increase their financial well-being. In Andra Pradesh, a number of suicides were blamed on excessive pressure to repay micro-loans, though no causal relationship was proven (Sanderson and Sengupta, 2011). However, the local authorities responded with regulatory measures, which effectively shut down local operations, and indirectly encouraged clients to default on their loans. Some critical voices have pointed out that competing government interest may have had interest in shutting down local competition in the market (Banerjee et al, 2010). Since the events of 2010, the Indian government has made the Reserve Bank the main regulator of microfinance institutions in India, in an effort to standardize the regulatory framework imposed on the industry. The sector in this case, is currently regulated separately from the rest of the financial market (Sanderson and Sengupta, 2011; Milana and Ashta, 2012).

These events caused some tarnish to the reputation of microfinance as legitimate tool for poverty reduction, but did help highlight the need for prudent regulation of the industry. Assurance that MFIs are careful and diligent in their lending and monitoring is key to the success of microfinance, since the social contract will cease to exist if too many clients default on their loans (Conning and Morduch, 2011).

If the microfinance industry is considered apart from the traditional financial market, there is less incentive for lawmakers to be aware of potential negative impact from MFIs upon the general financial health, or vice versa. As pointed out previously, Ahlin et al, finds clear evidence that the general financial market impacts the health of the MFIs operating within it (Ahlin et al., 2011). The risk associated with microfinance should therefore not just be considered in relation to the niche market alone, but also to the risk potentially posed for the financial market as a whole (Banerjee, 2013).

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The impact of regulation has previously been covered by a number of studies, mostly interested in its impact on the financial performance and sustainability of MFIs. In their 2011 study, Cull et al., found that regulation and supervision helps for-profit MFIs to keep their profit margins healthy, but has negative impact on the MFI’s level of outreach (Cull et al., 2011). Contrary to this, non-profit MFIs instead reduce their profit margins, but generally manage to keep their level of outreach to marginalised and more costly customers.

Other studies find that while regulation is associated with increased cost for the MFI, in the form of technology investments and security, it is also correlated with increased trust among MFI customers (Mersland and Strøm, 2009). The same authors, however, also found that increased regulation risks stifling innovation within MFI.

Hartaska et al. find that more traditional financial institutions tend to have higher costs associated with regulation than MFIs, due to higher and more restrictive levels of regulation (Hartaska et al., 2013). If the same regulation is imposed on MFIs, the authors argue that the increased costs neutralize the technical progress made by the MFIs. Because of this, the regulatory framework should encourage microfinance institutions to increase their management and governance capacity. The findings of regulatory impact is not conclusive across studies, however. For example, Hartaska and Nadolnyak found that a regulatory framework does not directly impact the financial performance or outreach of MFIs (Hartaska and Nadolnyak, 2007)

In terms of ensuring good corporate governance within the institutions, Barreiro and Ducasse suggest a Code of Conduct for MFIs, in accordance with the international standards for good practice in companies and institutions in general. The aim of the code is to promote a common culture and framework which encourages best practice within the institution (Barreiro and Ducasse, 2012).

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3.3.2. Why Macroeconomic Impact Matters

Despite the increased view of microfinance as more than just a development tool, used primarily by donors and NGOs to reach a set of pre-determined social goals, we know very little about how MFIs interact with its surrounding macroeconomic environment. This is in part due to limited data, which until recently furthermore had very low levels of reliability, but is also due to a lack of studies which specifically examine the financial behaviour of MFIs. As previously mentioned, the first empirical chapter seeks to help remedy this, by studying the level of liquidity created by microfinance institutions, thus providing further understanding of their ability to fulfil the functions of a financial intermediary.

We need to improve our understanding of the financial impact of MFIs, so that we may develop relevant and effective regulatory frameworks for the industry to operate within, as well as to more effectively be able to harness the possible macroeconomic benefits that the industry creates.

In an effort to shed some light on the impact of regulation on the ability of MFIs to fulfil their function as liquidity creators, the third empirical chapter looks at the relationship between the regulatory status of MFIs and levels of liquidity created for the market. I use a range of macroeconomic variables to control for the impact of other contextual factors, and use a range of cross-country and regional estimations, with country-level fixed effects.