How did growth in MFIs impact conventional bank spreads

What is it about?

The study investigates the impact on Microfinance institutions and banks on conventional bank profitability measured by net interest margins (bank spreads). We find that MFIs growth has impacted bank spreads due to either being an alternate source of funding for people or because MFIs may be dominantly using banks for funding

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Photo by Shane on Unsplash

Photo by Shane on Unsplash

Why is it important?

It is important because it suggests that MFis are negatively impacting bank spreads which need to be positive for banks. Additionally this evidence that MFis might not be actively pursuing the microfinance promise by focusing on larger safer clients.