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Revista mexicana de economía y finanzas
On-line version ISSN 2448-6795Print version ISSN 1665-5346
Abstract
RAMIREZ ROCHA, Adriana; CERVANTES ZEPEDA, Mauricio and BERNAL PONCE, Luis Arturo. The determinants of outreach and profitability in MFI’s: a structural equation approach. Rev. mex. econ. finanz [online]. 2019, vol.14, n.1, pp.129-146. ISSN 2448-6795. https://doi.org/10.21919/remef.v14i1.363.
The main objective of this study is to analyze the relationship between the financial performance and scope of MFIs with independent variables such as: country environment, MFI size, expenses, and capital structure. The Structural Equations Modeling (SEM) was used to verify direct and indirect relationships. It was found that the effect of these independent variables shows through operating expenses. Additionally, it was found that in a country with high levels of corruption, absence of rule of law, and government inefficiencies, MFIs are less likely to achieve their objectives due to the high operating costs allocated to reaching the population with low income. These factors also explain the financial performance and scope of MFIs, implying that operating expenses explain two of the most important determinants of MFI mission bias. The originality of this work resides in the methodology employed, the construction of all indicators and use of the regulatory environment, and the institutional development variables to analyze MFIs.
Keywords : Micro Finance Institutions; Welfare and poverty; Factor models; G21; P36; C38.