Are microfinance markets monopolistic?

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Kar , A K & Bali Swain , R 2018 , ' Are microfinance markets monopolistic? ' , Applied Economics , vol. 50 , no. 1 , pp. 1-14 .

Title: Are microfinance markets monopolistic?
Author: Kar, Ashim Kumar; Bali Swain, Ranjula
Contributor organization: Helsinki Centre of Economic Research (HECER), alayksikkö 2013-2021
Department of Political and Economic Studies (2010-2017)
Date: 2018
Language: eng
Number of pages: 14
Belongs to series: Applied Economics
ISSN: 0003-6846
Abstract: Do microfinance institutions (MFIs) operate in a monopoly, monopolistic competition environment or are their revenues derived under perfect competition markets? We employ the Panzar–Rosse revenue test on a global panel data to assess the competitive environment in which MFIs of five selected countries operate: Ecuador, India, Indonesia, Peru and Philippines, over the period 2005–2009. We estimate the static and the dynamic revenue tests, with analyses of the interest rate and the return on assets. We control for microfinance-specific variables such as capital assets-ratio, loans-assets and the size of the MFI. The analyses also account for the endogeneity problem by employing the fixed-effects two-stage least squares and the fixed-effects system generalized method of moments. Our results suggest that MFIs in Peru and India operate in a monopolistic environment. We also find weak evidence that the microfinance industry in Ecuador, Indonesia and Philippines may operate under perfect competition.
Subject: 511 Economics
market structure
dynamic panel data estimation
GMM Estimation
Panzar–Rosse revenue tests
Peer reviewed: Yes
Usage restriction: openAccess
Self-archived version: acceptedVersion
Grant number: 260894

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