Does Government Effectiveness and Regulatory Framework of a Country Influence the Performance of MFIs? an Empirical Study on Selected Asian Countries

Financial inclusion allows broader access to financial services and access to faster and more equitable growth. MFIs can play a significant role in facilitating inclusion, as they are uniquely positioned in reaching out to the rural poor. This paper tries to analyse the impact of Government effectiveness and regulatory framework of a country on the performance of MFIs using the data of 91 MFIs from selected seven Asian countries. This study has taken into account a period of 2004–2013. These selected Asian countries have different backgrounds of evolution of MFIs. To analyse the data of this period, longitudinal multilevel model has been used. This study has found that regulatory quality has negative impact on Return on Asset (ROA) in case of Bangladesh. In India and Vietnam, government effectiveness has positive impact on profit margin of MFIs.