Political Ideology of the Government and the Performance of Microfinance Institutions

We examine whether the performance of a microfinance institution (MFI) is affected by the political ideology of the government of its host country. Using data on 619 MFIs in 75 countries, we show that in countries with a left wing government, MFIs enjoy a higher portfolio growth relative to the MFIs in countries with a right wing or a centrist government. MFIs that operate in a left wing regime have lower operating costs, lower default costs,...