Financial and social performance of Senegalese MFIs: a comparative analysis of the effects of a default rate increase

The article focuses on the quality of the loan portfolio of microfinance institutions (MFIs) in Senegal. The study was designed to assess the effect of the increase in non-performing loans (NPLs) on financial and social performance of MFIs and to specify appropriate repayment policies in deteriorating loan portfolios. Data for the period (1980-2010) were collected from Senegalese MFIs and analyzed using VAR models and impulse functions. The results show a significant level of influence of financial variables as opposed to social variables, indicating that the financial dimension remains decisive in political management credit risk of MFIs in Senegal.