Influence of External Funding on Microfinance Performance

The aim of paper is to determine whether macroeconomic development and the size of banking sector affect the range of external funding and consequently the importance of these debt sources for microfinance performance. Our findings reveal that the growth of external sources is positively influenced by economic grow, level of corruption, unemployment or under certain conditions by the development of banking sector, as well. Likewise, their presence can have a positive impact on the number of clients, portfolio quality, margin or cost policy of MFIs. The opposite effect can appear if the ratio of external funding to total assets increases over time.