Macroeconomic Determinants of Microfinance Institutions' Profitability: The case of Morocco

Abstract

This study investigates the influence of various macroeconomic variables on the profitability of Moroccan microfinance institutions (MFIs) for the period from 1999 to 2019. Using data from the Mix Market and World Development Indicators data, and applying the generalized least squares regression technique, results indicate that GDP growth and inflation have no significant impact on the return on assets (ROA) of Moroccan MFIs. However, the results also show that unemployment and the rural population have a significant positive influence on the profitability of Moroccan MFIs. The results highlight the strategic importance of MFIs in mitigating the adverse effects of unemployment by supporting job creation through financing microenterprises. Additionally, the findings highlight the importance of using MFIs to foster the development of rural areas in Morocco.