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

We estimate the determinants of the interest rate spread of Peruvian microfinance institutions using a panel data model. We use information of two specialized microfinance banks, all the municipal savings banks, rural banks and development entities for the small and microenterprise from 2002 to 2013. We find that variables of each financial institution such as risk, size, costs, solvency and deposits are determinants of the interest rate spread in microfinance. In addition, aggregate variables such as economic activity, reserve requirements and interbank interest rates also have statistically significant effects on the intermediation margins. (Audio: Department of Economic Publications)