The Convergence Between Outreach and Financial Performance in Mediterranean MFIs: A Panel Data Analysis

There is a long-standing debate on the relationship between outreach and financial performance in the microfinance institutions (MFIs). Although previous researches have reported contradictory results, many of these studies suffer from problems of misspecified model and/or restricted data. In this paper, we employ a static panel data analysis to empirically examine the impact of outreach on financial performance for a sample of 16 Mediterranean MFIs over the 2001–2008 period. Our evidence implies, first that the non-governmental organizations commercial viability increases with average loan size. Second, this commercial viability also increases with the number of outstanding loans per women. Finally, neither targeting the poor nor targeting women affect the repayment default.