Aena Al-Faloos? Where is the Money? An Economic Analysis of Microfinance Institution Performance in the Middle East and North Africa After the Arab Spring

Microfinance has been a critical means of alleviating poverty and empowering low-income entrepreneurs in the MENA region. However, since the Arab Spring, a series of regime changes and demonstrations induced a series of economic and political shocks to the region. In this paper, I will assess the impact of the Arab Spring on microfinance institution (MFI) financial performance. Through a difference-in-differences regression on seven MFI financial performance indicators, I show that the Arab Spring had average treatment effects on the treated which indicated worsened financial performance of MFIs in highly impacted MENA countries after the shock. In addition, I examine the year-by-year changes in these financial performance indicators through a detailed event study of each indicator. This paper provides evidence that political and economic shocks negatively impact microfinance.