When research meets the field:
the ADA - CERMi partnership
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). The center aims to study the management and practices of microfinance organizations in a multidisciplinary way, and thus contribute to the academic discussion on microfinance and financial inclusion, but also more broadly on the social economy. CERMi also organizes the European Microfinance Programme with 21 successfully defended PhD theses, more than 40 associate researchers and numerous partnerships with academics and practitioners in the northern and in the southern hemisphere.
The collaboration between ADA and CERMi includes:
- European Microfinance Programme (EMP): providing training and hosting students for internships at ADA's partner organisations;
- Provision of field data and advice to researchers for research activities;
- Creation of synergies between researchers and practitioners in the financial inclusion sector and sharing research results during events such as the African Microfinance Week (SAM), the ADA Chair conferences and other relevant events.
Thesis by Tristan Caballero-Montes on the regulation of the microfinance sector
In 2018, Tristan Caballero-Montes joined the CERMi research unit hosted by UMONS, within the Department of Economics and Business Management (EGEE), headed by Pr. Marc Labie.
ADA is engaged in a specific research collaboration with CERMi in the framework of Tristan's PhD thesis. For ADA, research is a 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 ADA was 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-wide projects.
The thesis focuses on regulation of the microfinance sector and its contribution to the social and sustainability objectives of the organisations. It studies regulation, competition and self-regulation in microfinance, and aims to propose a more systemic vision of the regulation of the sector.
Goals of the thesis :
- Better understanding microfinance regulation: How does it affect MFIs’ performance and markets?
- Are there interactions between regulation and market dynamics? How to integrate these into regulatory decision-making?
- How to support professional associations/network so that they promote good practices and support MFIs in their dual objective?
The thesis is based on four scientific articles:
- The first article analyses the implications of a regulatory strengthening ("law 2012-14") carried out by the BCEAO (Central Bank of West African States) in Benin, through various hypothesis tests and econometric methods. Investigating the regulatory framework of the Beninese market, the article aims at drawing general conclusions for other similar markets or those seeking more regulation.
- The second article examines the interaction between 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 uses different econometric techniques and various robustness tests.
- The third article aims, through a case study of the Cambodian market, to explore the effects of an interest rate cap in a saturated microcredit market. 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 fourth 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).
Download the articles:
Research Note N°1
Research Note N°2
Research Note N°3
Research Note N°4
The full thesis "Microfinance Industry Dynamics: Analyses of Regulation, Competition, and Collective Action" is hosted on the Research Gate website.