Macroeconomics of microfinance on a sub-national level

Bachelor Thesis from the year 2013 in the subject Economics - Macro-economics, general, grade: 1.7 (German scale), University of Bayreuth, course: International Economics and Development, language: English, abstract: This thesis analyses microfinance institutions (MFIs) as sub-national actors that are subject to their immediate macroeconomic environment. Appreciating the divergence of national and sub-national economic trends and incorporating them into the currently used assessment criteria can make MFI evaluation more accurate. I make this point by estimating the impact of state-level macroeconomic factors on two performance indicators of 53 microfinance institutions from Mexico and Brazil. The focal outcome variables, namely operational self-sufficiency and loan delinquency, are first regressed on state-level data and then on national data as a bench-mark. I will demonstrate that by increasing data granularity from the national to the state level, the success of microfinance institutions can be predicted with significantly higher precision. There is also evidence that MFIs are more strongly influenced by long-term economic trends than by fluctuations of the economic cycle.