Excessive focus on risk? Non‐performing loans and efficiency of microfinance institutions
研究发现小额信贷机构的运营成本与坏账率呈U型关系，说明过度控制贷款损失反而推高成本，机构需在成本效率和资产质量间取得平衡。
Abstract Microfinance is a banking market in which operating costs are high, while non‐performing loans (NPLs) rates are low. While the existing literature tends to explain that the high operating costs arise from the provision of small loans, we argue that excessive efforts to control loan losses can also be a contributing factor. Therefore, this article investigates the relationship between NPLs and the cost efficiency of microfinance institutions (MFIs). Using a unique global sample of rated MFIs and applying stochastic frontier analysis together with Granger‐causality test and generalized method of moments (GMM), we find, in contrast to positive linear relationship evidence in commercial banking studies, a nonlinear (U‐shape) relationship between operating costs and NPLs. This implies that MFIs need to balance their cost efficiency with asset quality.