Funding Strategy and Performance of Microfinance Institutions: An Exploratory Study

摘要

Three groups of MFIs with homogeneous funding practices are identified: unsubsidized deposit-based MFIs, unsubsidized borrowing-based MFIs, and subsidized MFIs. Subsidies enhance financial performance. Unsubsidized MFIs that charge higher interest rates exacerbate adverse selection and moral hazard and thus worsen net returns.