Do Migrants' Deposits Reduce Microfinance Institutions' Liquidity Risk?
This paper is devoted to the analysis of liquidity risk in microfinance. Using a re-sampling method, the authors estimate withdrawal rate distributions for migrants' and locals' deposits, using an original database of 7,828 deposit contracts issued between 2002 and 2008 by 12 village banks belonging to a major Malian rural microfinance network (PASECA-Kayes). Results show that migrants tend more than locals to default on their deposit contracts. The deposits at risk are also higher when considering migrants' time deposits compared to locals' deposits. The liquidity risk associated to migrants' deposits is then higher compared to locals' deposits.