Financial performance of microcredit associations in Morocco: An econometric analysis of determinants (2003-2017)

Abstract

This article aims to analyze the determinants of financial performance of microcredit associations (MCA) in Morocco by testing hypotheses related to microfinance approaches, namely the institutionalist approach and the welfarist approaches. To do this, this study follows a positivist approach adopting a hypothetico-deductive approach. The data used cover eight microcredit associations over a period spanning from 2003 to 2017 and are analyzed using panel data econometrics.

The results show a positive and significant impact of the number of active borrowers, the age of the MCA, and the percentage of female borrowers on financial performance, measured by return on assets. On the other hand, the average cost per borrower and risk portfolio have a negative and significant impact on financial performance. Regarding the debt ratio and economic growth, both variables do not show a significant relationship with financial performance.

The results of this study have several practical implications for MCA in Morocco. It is crucial to focus on increasing the number of active borrowers and strengthening risk and cost management to optimize profitability. Furthermore, a strategy aimed at increasing the inclusion of female borrowers could enhance the financial stability of the associations. Finally, prudent management of risk portfolios and cost optimization should be priorities for improving long-term profitability.

Keywords : determinants, financial performance, microcredit associations, microfinance, Morocco

Classification JEL : G21, G23, G32, O16

Type de l’article : Applied research