Bert D’Espallier

• PhD in Applied Economics
• Professor (Assistant) at KU Leuven

We derive and estimate a production function for microfinance institutions to provide empirical evidence of the ethical dilemma of balancing social and financial logics in hybrid organizations. A worldwide panel dataset of microfinance institutions is utilized and a production function augmented by average loan size is estimated using the control f...

Comment les donateurs doivent-ils financer les organisations de microfinance afin de maximiser leur impact social ? Doivent-ils concentrer leurs contributions sur quelques bénéficiaires ou plutôt les répartir entre de nombreuses organisations ? Nous abordons cette question délicate en estimant séparément les effets sur les performances sociales du...

Savings groups provide savings, loans, and a social welfare fund to low-income households. The social fund is an informal insurance mechanism of risk-sharing, which covers the costs of losses related to life-cycle events that affect the extreme poor without insurance. This study shows that the insurance mechanism of the welfare fund is associated t...

Savings Groups (SGs) are informal community-based entities that act as grassroots financial cooperatives. They provide financial services to their members over an agreed-upon time period, commonly referred to as a ‘cycle’. During this cycle, saving and borrowing transactions take place during regular member meetings. Using new data on SGs worldwide...

Drawing on a global sample of microfinance institutions (MFIs), this paper offers insights into the trade-off versus synergy debate of adopting multiple institutional goals in hybrid organisations. Additionally, it unravels which organisation- and country-specific determinants associate with top joint performance using machine-learning techniques....

Savings groups provide savings and loans to low-income individuals in rural and peri-urban areas. This study applies Bayesian data mining methods to a database of more than 200,000 savings groups with the aim of identifying which micro, meso, and macro factors are associated to profit generation in the groups. The results show that the facilitation...

This paper examines the effect of the gender combination of client-loan officer pairs on loan repayment in an Ecuadorian microfinance institution. We show that among the four possible client-loan officer gender pairs i.e. female client-female loan officer, female client-male loan officer, male client-male loan officer and male client-female loan of...

Members’ Spotlight on Encouraging Effective and Inclusive Savings

Formal financial institutions inadequately distribute startup capital to business ventures of ethnic minorities, women, low-educated, and young people. Self-financing groups fill this gap because in these associations agents accumulate their savings into a fund that is later used to provide loans to the members. This study builds and simulates an a...

Recent research suggests that many microfinance institutions increasingly focus on financial performance at the expense of the social component of their dual objectives. Existing studies typically assume that capital providers and managers mainly drive this so-called mission drift. In this study, we investigate whether ‘personal mission drift’ at t...

Combining multivariate and qualitative analyses, this micro-level study suggests an explanation for the persistence of informal savings in rural South India despite publicly run large-scale programs to promote bank savings. Notably gold, but also ROSCAs and private lending, remain dominant forms of saving. We argue that cultural norms and social in...

In the microfinance industry an increasing number of providers are undergoing an institutional transformation from NGO to a shareholder-owned and typically regulated financial entity. Little is known about the extent to which this transformation affects the way microfinance institutions (MFIs) conduct their business. Our results obtained by applyin...

This paper investigates whether financial cooperatives are crowded out by commercial banks in the process of financial sector development. We use a self-constructed database based on World Council of Credit Unions data for the years 1990-2011 of cooperatives in 55 developing countries. Our empirical results are threefold. First, financial cooperati...

Building on behavioral theory, we argue that the effect of board demography on the performance of small and medium-sized family firms differs significantly at the individual firm level and that the degree by which board task performance meets board task needs explains this effect. Using a Bayesian estimation method, we obtain firm specific estimate...

There is growing evidence that microcredit does little to support self-employment. Two main explanations are typically emphasized: from a microeconomic perspective, the poor have been argued to lack the skills, resources and motivation to start their own businesses; from a macroeconomic perspective, local markets are often saturated. This article u...

This paper investigates the relations between female leadership, firm performance, and corporate governance in a global panel of 329 Microfinance Institutions (MFIs) in 73 countries covering the years 1998–2008. The microfinance industry is particularly suited for studying the impact of female leadership on governance and performance because of its...

There is now an increasing consensus that the effects of microfinance on self-employment are limited, with two common interpretations. The microeconomic approach suggests that the poor lack the skills, the resources and the motivation to start their own business. The macroeconomic approach argues that local markets are already saturated. In this pa...

This paper starts from the observation that 23% of the world’s microfinance institutions (MFIs) manage without subsidies. We examine how unsubsidized institutions cope with their social mission. Overall, the lack of subsidies worsens social performances. However, our results show that strategies to achieve financial self-sufficiency differ substant...

We construct firm-level estimates for the cash flow sensitivity of cash (CCFS) by modelling heterogeneous slopes in reduced-form cash equations. This approach allows identifying firms with a high, low or even negative savings propensity. We find that high CCFS firms have higher income variation, suggesting cash buffering is triggered by income shoc...

This article analyses the relationship between outreach and performance of Microfinance Institutions (MFIs) on the one hand and traditional financial sector development on the other. The results indicate that MFIs reach more clients and are more profitable in countries where access to the traditional financial system is low. This finding is in line...

We provide empirical evidence on focusing on women in microfinance and its consequences for microfinance institutions (MFIs). Based on a global dataset, the results indicate that a focus on women is associated with group-lending methods, international orientation, smaller loans, and non-commercial legal status. We find that a focus on women signifi...

We demonstrate that subsidy uncertainty in microfinance can lead to mission drift and defeat poverty alleviation efforts. Our model shows that microfinance institutions, fearing that subsidies may dry up, have no alternative but to build precautionary savings by serving wealthier clients, thereby deviating from their poverty alleviation mission. Us...

This study responds to the need for more empirical knowledge pertaining to the effect of religion on development efforts. We use data from the microfinance industry to study performance differences between Christian and secular Microfinance Institutions (MFIs). We find that Christian MFIs have significantly lower funding costs and consistently unde...

This micro-level study combines multivariate and qualitative analyses to highlight the fragmented nature of debt in southern Indian rural households. It finds that debt is socially regulated in the sense that social interactions shape the cost, use and access to debt. Caste, social class and location affect how individuals borrow varying amounts fr...

This article aimed to deepen understandings of poor household borrowing practices by drawing on a case study from rural Southern India. It combines descriptive statistics and qualitative analysis to show that households juggle with a wide range of borrowing sources and that each serves very specific purposes. From a theoretical perspective, we sugg...

We employ a Bayesian estimator to construct firm-varying investment-cash flow sensitivities (ICFS) for a sample of 90 Spanish listed firms over a 10-year period (1999–2008). We then analyze which variables are associated with the firm-level ICFS estimates. The results indicate that firms with high ICFS are capital-intensive firms with high growth r...

This paper uses a global data set of 350 microfinance institutions (MFIs) in 70 countries to study the common belief that women are generally better credit risks in microfinance than men. The results confirm that a higher percentage of female clients in MFIs is associated with lower portfolio risk, fewer write-offs, and fewer provisions, all else b...

In this paper, we empirically examine how leverage affects firm performance when information asymmetries are large. We argue that entrepreneurs are strongly incentivized to maximize earnings when leverage is high in order to reduce the likelihood of adverse credit decisions and firm liquidation. Our empirical tests focus on the effects of leverage...

This paper analyzes gender-differences with respect to microfinance repayment-rates using a large global dataset covering 350 Microfinance Institutions (MFIs) in 70 countries. The results indicate that more women clients is associated with lower portfolio-at-risk, lower write-offs, and lower credit-loss provisions, ceteris paribus. These findings c...

Boards of directors have enjoyed an increased attention in recent management research. Because of scant and conflicting empirical evidence on the relationships between board demographic variables and firm performance, recent research has shown special interest for the antecedents of board performance in an effort to open the black box of the board...

We employ a Bayesian estimation technique to construct firm-varying investment-cash flow sensitivities (ICFS) for a sample of 90 Spanish listed firms over a 10-year period (1999-2008). Then we analyze which variables are associated with the firm-level ICFS-estimates both univariately and multivariately. The results indicate that firms with high ICF...

Recent studies in corporate finance estimate firm-varying investment-cash flow sensitivities (ICFS) when empirically studying financing constraints. We go along with this approach but suggest two methodological improvements. First, we estimate firm-varying ICFS by modeling heterogeneous slopes in the investment equation thereby taking into account...

Using a panel of 5,999 small and medium-sized Belgian enterprises (SMEs) over the period 2000-2004, we identify three measures of investment opportunities suitable for unlisted firms. We then estimate firm-varying investment-cash flow sensitivities (ICFS) from reduced-form investment equations that include these measures, and compare them with thos...

This paper analyzes the relationship between banks’ divergent strategies toward specialization and diversification of financial activities and their ability to withstand a banking sector crash. We first generate market-based measures of banks’ systemic risk exposures using extreme value analysis. Systemic banking risk is measured as the tail be...

We evaluate two models commonly used for measuring financial constraints in their ability to discriminate between constrained and unconstrained firms. We compute firm-specific estimates for the "cash flow sensitivity of investment" (CFSI), and the "cash flow sensitivity of cash" (CFSC) and provide a framework that summarizes the performance of each...

In the empirical literature on financial constraints, firms are usually assigned to distinct groups, according to whether or not they are supposed to be financially constrained (FC). Several recent empirical papers studying the relationship between firms’ cash flows and investment, have found mixed results regarding whether or not more FC firms sho...

In the empirical literature on financial constraints, firms are usually assigned to distinct groups, according to whether or not they are supposed to be financially constrained (FC). Several recent empirical papers studying the relationship between firms’ cash flows and investment, have found mixed results regarding whether or not more FC firms sho...