Determinants of Liquidity in Microfinance Institutions: Evidence from Developing Economies
Maintaining an optimal level of liquidity remains a crucial agenda for firms to minimise liquidity risks. Therefore, the study aims to identify the drivers of liquidity by utilizing firm-level data of 1,544 microfinance institutions (MFIs), covering a total of 112 developing countries and a period o...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
World Scientific Publishing
2024-03-01
|
| Series: | International Journal of Empirical Economics |
| Subjects: | |
| Online Access: | https://www.worldscientific.com/doi/10.1142/S281094302450001X |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Maintaining an optimal level of liquidity remains a crucial agenda for firms to minimise liquidity risks. Therefore, the study aims to identify the drivers of liquidity by utilizing firm-level data of 1,544 microfinance institutions (MFIs), covering a total of 112 developing countries and a period of 2010–2018. The data were then analysed using conventional econometric tools and techniques. Among others, the study found that board size, portfolio quality, donations and size of MFIs have a positive effect on the liquidity of MFIs, while gender diversity at the board level, operational self-sustainability, staff productivity, legal status and gross domestic product (GDP) growth revealed a negative effect. After conducting several robustness checks, including alternative proxies, sub-samples and endogeneity-corrected techniques, our findings remain mostly consistent. Policy implications are further discussed. |
|---|---|
| ISSN: | 2810-9430 2810-9449 |