LAUSR

This study focuses on the impact of asset size on financial performance and outreach. More specifically, we determine whether an increase in asset size is more relevant for microfinance institutions with low performance than for those with high performance. To achieve this goal, we applied a panel quantile approach with non-additive fixed effects that helps to organize our microfinance sample into subgroups with similar performance levels. The results reveal that an increase in asset size leads to increased profitability, with a greater impact for microfinance institutions that have poor or low-end profitability levels than for those with satisfactory levels. For outreach, we found that an increase in asset size positively impacts the average loan and the number of active borrowers, but reduces the percentage of female borrowers in the client portfolio. An increase in asset size reduces the percentage of female borrowers more for MFIs that target women less. Conversely, for MFIs that already have a high level of female borrowers, an increase in asset size reduces the percentage of female borrowers less. In other words, increasing asset size drives out female borrowers from the client portfolio, and this driving-out effect is greater for MFIs targeting fewer female borrowers.