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Global insights on wage and employee turnover in microfinance

Year: 2025

Type: article

Abstract: Microfinance institutions (MFIs) face high operating costs partially due to employee turnover while striving to balance financial sustainability with their social mission. This study examines the relationship between wages and employee turnover, using data from 979 MFIs in 95 developing countries from 2010 to 2018. Utilizing two instrumental variables for wage and various estimation techniques, we find a nuanced relationship: higher wages initially reduce employee turnover and enhance employment stability. Beyond a certain threshold, increased wages lead to higher turnover and instability. Additionally, employee turnover is lower for non-profit MFIs, while MFIs in wealthier economies experience higher turnover.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2025.104117

Authors: Moh'd Al-Azzam, Shatha M. Obeidat

Institution: Qatar University

Language: English

Topic: Microfinance and Financial Inclusion

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty

Open Access status: gold

Estimated APC paid: $1,930