Financial-Linkages and Cost Efficiency: Lessons from Tanzanian Microfinance Cooperatives
This paper examines the effect of financial linkages on cost margin and efficiency of microfinance cooperatives (MCs) in Tanzania. Data collection involved focus group discussions comprising 112 managers from 102 MCs. The paper reveals that financial linkages increase cost margin and inefficiency of MCs. It therefore enlightens MCs’ stakeholders on the possible explanations of the positive effects of financial linkages on cost margin and inefficiency. The findings are useful for policy makers, development institutions, MCs and banks.