Which Factors Drive the Regional Expansion of Microfinance Institutions? Evidence from Peru

Abstract

This paper analyses the location decisions and geographical expansion of microfinance institutions (MFIs) across Peru. To this end, econometric analyses are performed on a self-constructed dataset that covers MFI presence and expansion in the 1832 districts of Peru, and this for 39 MFIs and 13 commercial banks over the period 2001–2008. The paper shows that Peruvian MFIs have expanded considerably during the last decade. MFIs especially increase access in districts with higher levels of development and therefore seem to follow principally a commercial logic. Districts with banks have also a higher probability of an MFI opening. Copyright © 2015 John Wiley & Sons, Ltd.