ADA's partnership with the Centre for European Research in Microfinance

The Centre for European Research in Microfinance (CERMi) is a major microfinance research center in Europe. Founded in 2007 by the University of Mons (UMONS) and the Université Libre de Bruxelles (ULB), CERMi is co-directed by Prof. Marek Hudon (ULB), Prof. Marc Labie (UMONS) and Prof. Ariane Szafarz (ULB). Through the promotion of high-level academic research and the organization of numerous scientific events, the center aims to study the management and practices of microfinance organizations in a multidisciplinary way, and thus contribute to the academic discussion around issues related to microfinance and financial inclusion, but also more broadly to the social economy. CERMi is also at the origin of the organization of the European Microfinance Programme and today has 21 successfully defended PhD theses, more than 40 associate researchers, and numerous partnerships with academic and field actors, in the North and in the South.

For several years now, the collaboration between ADA and CERMi has taken place at different levels:

  • European Microfinance Programme (EMP): providing training and hosting students for internships in ADA's partner organizations;
  • Provision of field data and advice to researchers to feed research activities;
  • Creation of synergies between researchers and practitioners in the sector and valorization of research results during events such as the African Microfinance Week (SAM), the ADA Chair conferences and other events in the sector.

In 2018, ADA is engaged in a specific research collaboration with CERMi in the framework of Tristan Caballero Montes' PhD thesis. Indeed, for ADA, research is a relevant way to produce new knowledge for the inclusive finance sector. Moreover the research is linked to the sector's issues and uses data from the field. The thesis is in line with this logic, since we were collaborating from the beginning with Tristan on the definition of a common project. ADA ensures that the research meets the needs of practitioners in the sector and facilitates access to field data. Ultimately, this new knowledge will feed into current and future ADA and sector projects.

Thesis by Tristan Caballero Montes on the regulation of the microfinance sector

In 2018, Tristan joined the CERMi research unit hosted by UMONS, within the Department of Economics and Business Management (EGEE), headed by Pr. Marc Labie.

His thesis focuses on the issue of regulation of the microfinance sector and its contributions to the social and sustainability objectives of the organizations that make it up. Overall, it studies regulation, competition and self-regulation in microfinance, and aims to propose a more systemic vision of the regulation of the sector.

Concretely, the thesis is based on four scientific articles, three of which are currently available below, the last article is still in progress:

  • The first article aims, through a case study of the Cambodian market, to explore the effects of an interest rate cap in a saturated microcredit market. Ultimately, the article proposes a framework for analysis and its application in 53 countries, thus helping regulators to adopt a broader reflection in their decision making regarding rate controls.
  • The second article examines the interaction between the presence of an interest rate cap, the financial inclusion of poor clients, and the degree of competition among microfinance institutions. Through a large econometric study of nearly 1,000 institutions in more than 70 countries, the paper mobilizes different econometric techniques and various robustness tests.
  • The third article explores the "self-regulatory" role that professional associations can play in the sector, through the establishment of standards or rules. The article is based on a case study of ADA's partner, the Tanzania Association of Microfinance Institutions (TAMFI).
  • The fourth paper analyzes the implications of a regulatory strengthening ("law 2012-14") carried out by the BCEAO in Benin, through various hypothesis tests and econometric methods. Investigating the Beninese market, experienced in terms of regulatory framework, the article aims at drawing general conclusions for other similar markets or those seeking more regulation. (Available soon)

Download the available articles:

Research Note N°1 - Interest Rate Restrictions and Microfinance: Insights from Cambodia

Research Note N°2 - Investigating the Interplay between Interest Rate Caps and Competition in a Financial Inclusion Context

 Research Note N°3 - Industry Self-Regulation and Microfinance: Exploring Key Issues through the Case of TAMFI in Tanzania