Diversification of Microfinance Institutions: Determinants for Entering the Remittances Market

As financial intermediaries, microfinance institutions (MFIs) contribute to integrate remittances into the formal financial system. Using a database including 225 MFIs from Latin America and the Caribbean, this paper investigates the institutional factors that influence the MFI decision-making process of entering the remittances market. Operational, managerial, and financial performances are considered as potential explanatory factors. Results exhibit that financial performance has the highest impact on the MFIs’ decision to diversify by offering a remittances service. Latest version (August 2011): http://www.solvay.edu/sites/upload/files/CEB_WorkingPapers/LastUpdate/wp10043.pdf