The impact of competition within the microfinance industry and its effects on performance of microfinance institutions

Abstract

With the growth of competition within the micro-finance industry, economists have favored its existence basing their argument on its ability to increase the welfare of consumers by promoting productivity efficiency, i.e. lower production costs and lower prices on goods and services. its is also seen to bring about the innovation of new products and technologies (Motta,2004). By inferring, we therefore expect similar benefits within the micro-finance industry. such competitive conditions could also cause MFIs to either expand into new markets to generate higher earnings and maintain its market domination, implying a rise in outreach.