Quantifying the Managerial Ability of Microfinance Institutions: Evidence from Latin America

This paper aims to quantify the managerial ability of the microfinance institutions (MFIs) in Latin America and the Caribbean countries. Drawing on data for 419 MFIs in 24 Latin America and the Caribbean countries between 2003 and 2014, we find that MFIs' managers with higher managerial ability outperform MFIs' managers with lower managerial ability. The study also finds that managers in Brazil (Trinidad and Tobago) have higher (lower) ability and are more (less) efficient. The findings help policymakers and regulators to propose with policy recommendations for long‐term sustainability of MFIs by estimating and decomposing the ability of the managers.