Determinants of the Financial Margin in the Microfinance Sector: The Peruvian Case

This study analyzes the determinants of the net interest margin of microfinance institutions in Peru. To this end, it uses a panel dataset containing information on two banks specializing in microfinance, all municipal savings banks, rural savings banks, and development institutions for small and microenterprises, covering the period from 2002 to 2013. The study finds that variables specific to each financial institution—such as risk, size, costs, solvency, and deposits—are key determinants of the financial margin, while aggregate variables such as economic activity, reserve requirements, and the interbank interest rate also have statistically significant effects on it.