The costs and benefits of subsidized microfinance are still a controversial topic. We evaluate how subsidies affect the cost-efficiency of microfinance institutions (MFIs). At the same time, we account for endogenous self-selection into the business models of credit-only versus...

Abstract: It is by now commonly understood that healthy banking systems require not only more insightful regulation and supervision but a new emphasis on market discipline. In this regard a rapidly growing body of research has focused on both measures internal to the firm the bank –...

At present, many microfinance institutions (MFIs) not only lend but also collect savings to serve better the needs of the poor. Little is known, however, if MFIs' overall costs decrease or increase as a consequence, nor it is clear which MFIs may benefit the most from expansion into savings...