Performance of microfinance institutions in Muslim countries

Humanomics ◽  
2014 ◽  
Vol 30 (2) ◽  
pp. 162-182 ◽  
Author(s):  
Ali Ashraf ◽  
M. Kabir Hassan ◽  
William J. Hippler III
Keyword(s):  
Performance Measures ◽  
Muslim Country ◽  
Microfinance Institutions ◽  
Loan Loss ◽  
Firm Level ◽  
Cross Sectional ◽  
Content Type ◽  
Explanatory Variables ◽  
Muslim Countries ◽  
The Difference

Purpose – The aim of the paper is to analyze whether performance measures and their factors for microfinance institutions (MFIs) in Muslim countries are significantly different from those in their non-Muslim counterparts, central to the Islamic scholars' argument that religious and cultural norms in Muslim countries may drive the preference of Islamic microfinance over conventional microfinance. Design/methodology/approach – Using a cross-sectional dataset of 2,138 firm-years for 754 different MFIs across 83 countries, 33 Organization of Islamic Conference (OIC) member Muslim countries and 50 non-member countries, we analyzed the MFI performance based on three sets of measures: outreach, loan recovery and profitability and overall financial performance measures, with respect to two sets of explanatory variables, namely, country-specific and firm-level variables. Findings – Results show that country gross domestic product size is positively related with profitability, and the percentage of women borrowers is also significant in driving loan recovery and firm profitability in the OIC sample, but they are otherwise not significant for the rest of the world sample. Practical implications – This study contributes to the understanding of the core argument in the motivation of Islamic MFIs, which is whether cultural and religious factors are important for MFI success in Muslim countries. Originality/value – This study introduces a variable that measures the difference between a country's independence year and their OIC membership year as a proxy for the “country religious inclination” of a Muslim country. Results suggest that countries with delayed membership in OIC show lower inclination to popular Islamic beliefs and higher market penetration of conventional microfinance outreach. Positive relationships among a country's religious inclination and loan loss ratios and loan provisions are also consistent with the moral hazard hypothesis that few religious communities may be more prone to default.

Information risk, stock returns, and asset pricing: Evidence from China

2017 ◽  
Vol 30 (4) ◽  
pp. 379-394 ◽  
Author(s):  
Raheel Safdar ◽  
Chen Yan
Keyword(s):  
Stock Returns ◽  
Factor Model ◽  
Empirical Literature ◽  
Firm Level ◽  
Cross Sectional ◽  
Market Pricing ◽  
Content Type ◽  
Information Risk ◽  
Accruals Quality ◽  
Three Factor

Purpose This study aims to investigate information risk in relation to stock returns of a firm and whether information risk is priced in China. Design/methodology/approach The authors used accruals quality (AQ) as their measure of information risk and performed Fama-Macbeth regressions to investigate association of AQ with future realized stock returns. Moreover, two-stage cross-sectional regression analysis was performed, both at firm level and at portfolio level, to test if the AQ factor is priced in China in addition to existing factors in the Fama French three-factor model. Findings The authors found poor AQ being associated with higher future realized stock returns. Moreover, they found evidence of market pricing of AQ in addition to existing factors in the Fama French three-factor model. Further, subsample analysis revealed that investors value AQ more in non-state owned enterprises than in state owned enterprises. Research limitations/implications The study sample comprises A-shares only and the generalization of the findings is limited by the peculiar institutional and economic setup in China. Originality/value This study contributes to market-based accounting literature by providing further insight into how and if investors value information risk, and it seeks to fill gap in empirical literature by providing evidence from the Chinese capital market.

The response of majority employee-owned firms during the pandemic compared to other firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Joseph Blasi ◽  
Douglas Kruse ◽  
Dan Weltmann
Keyword(s):  
Design Methodology ◽  
Employee Ownership ◽  
Social Implications ◽  
Firm Level ◽  
Content Type ◽  
Rutgers University ◽  
Employment Trends ◽  
The Difference ◽  
Industry Membership ◽  
Practical Implications

PurposeThe purpose of this study is to understand how majority employee-owned firms responded to the pandemic compared to firms that were not majority employee-owned. The Employee Ownership Foundation partnered with Rutgers University and the SSRS survey firm to survey ESOP and non-ESOP firms about their responses to the COVID-19 pandemic. A key purpose of the survey was to estimate firm-level changes in employment from mid-January to August (current employment figures were adjusted to August 5 using BLS industry employment trends). The survey also looked at other forms of adjustment and responses to the pandemic as reviewed below. The focus in this study is on the differences between firms that are majority owned by ESOPs and those that are not.Design/methodology/approachThe survey included 247 executives from ESOP Association member companies and 500 executives from an SSRS business panel constructed to be representative of US companies with 50 or more employees. The survey started on August 5 and ended on September 23, 2020.Findings(1) Majority ESOP firms had employment declines from January to August that were on average only one-fourth as large as for other firms. The difference is maintained when controlling for industry membership. (2) Majority ESOP firms were more likely to be declared “essential,” but the lower employment cutbacks among majority ESOP firms remain among essential and non-essential businesses. As essential businesses, majority ESOP firms were more likely receive Paycheck Protection Program or other government pandemic assistance, but both assistance recipients and non-recipients had lower employment cutbacks among majority ESOP firms. (3) The extent of employment cutbacks was higher for non-managers than for managers, but the manager/non-manager gap was higher among other firms than among majority ESOP firms.Research limitations/implicationsThis study supports empirical findings done previously.Practical implicationsThis study suggests to non-EO firms what they can do.Social implicationsThis study suggests strengths of EO firms.Originality/valueA very original and one-of-a-kind dataset.

An empirical investigation of buyer–supplier relationship typologies and their behavioral and performance outcomes

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jin Li ◽  
Linlin Chai ◽  
Chanchai Tangpong ◽  
Michelle Hong ◽  
Rodney D. Traub
Keyword(s):  
Performance Measures ◽  
Online Survey ◽  
Performance Outcomes ◽  
Superior Performance ◽  
Cross Sectional Survey ◽  
Cross Sectional ◽  
Content Type ◽  
Behavioral Dynamics ◽  
And Performance ◽  
Supplier Relationship

Purpose This study aims to examine empirically the existence of four classical and four emerging buyer–supplier relationship (BSR) types and how they differ in terms of behavioral dynamics and performance measures. Design/methodology/approach This study uses an online survey to collect data from 371 purchasing managers in the USA. Findings A cluster analysis statistically supports the existence of five of these eight BSR types, including strategic/bilateral partnership, market/discrete, supplier-led collaboration, captive supplier/buyer dominant and captive buyer/supplier dominant BSRs. Further, ANOVA tests show that these five BSRs differ in terms of behavioral outcomes and performance measures. Research limitations/implications This study is based on a cross-sectional survey so it cannot examine how these BSR types may evolve over time, and it is not suitable to examine some rare types of BSRs. In addition, this study does not consider contextual factors that may moderate the influence of BSR types on the behavioral dynamics and performance measures. Practical implications Managers should consider the potential to be able to develop and enhance a strategic/bilateral relationship with their supply chain partners, which in at least some circumstances can lead to superior performance results. Similar observations can be made with respect to supplier-led and, to a lesser degree, buyer-led collaboration. Originality/value Most existing research of the BSR types is largely a product of theoretical classifications, and there is also a lack of research of their performance implications. This study fills these gaps in the literature.

The role of entrepreneurship in reducing poverty in agricultural communities

2021 ◽  
Vol 15 (5) ◽  
pp. 665-683
Author(s):  
Mufaro Dzingirai
Keyword(s):  
Poverty Reduction ◽  
The Body ◽  
Exploratory Research ◽  
Microfinance Institutions ◽  
Cross Sectional ◽  
Content Type ◽  
Agricultural Communities ◽  
Agricultural Entrepreneurship ◽  
Practical Implications

Purpose Entrepreneurship has increasingly become a subject of interest for scholars and policymakers in an attempt to reduce poverty in agricultural communities across the world, especially in Africa. Accordingly, the purpose of this paper is to examine the role of entrepreneurship in reducing poverty in agricultural communities of Lower Gweru, Zimbabwe. Design/methodology/approach Exploratory research design informed the data collection and analysis in this study. In-depth interviews were conducted with 20 owners of agribusinesses from various socio-economic backgrounds. The collected data from the field were analyzed using thematic analysis. Findings The results revealed that entrepreneurship plays a catalytic role in poverty reduction in agricultural communities through food security, skill transfer, employment creation, income generation and a decrease in food costs. Research limitations/implications This study focused on four agricultural communities in Lower Gweru which can limit the generalizability of the results to other contexts. Furthermore, this inquiry is a cross-sectional study that did not capture the longitudinal factors that can affect entrepreneurship and poverty reduction in agricultural communities. Practical implications The research outcomes have some practical implications for the Zimbabwean government and microfinance institutions in designing policies and programs to reduce poverty in marginalized agricultural communities. The findings are also useful for non-governmental organizations in designing, monitoring and evaluating poverty reduction programs in agricultural communities. Originality/value This study advances, contextualizes and enriches the body of knowledge concerning agricultural entrepreneurship and poverty reduction in the under-researched setting of agricultural communities. Notably, this study captures the African flavor in the agricultural entrepreneurship and poverty reduction discourse by focusing on the unique Zimbabwean context.

Blue ocean leadership activities improve firm performance

2018 ◽  
Vol 11 (2) ◽  
pp. 359-375 ◽  
Author(s):  
Kok Liang Loh ◽  
Shari Mohd Yusof
Keyword(s):  
Firm Performance ◽  
Lean Manufacturing ◽  
Sampling Procedure ◽  
Mediation Effect ◽  
Cross Sectional Survey ◽  
Cross Sectional ◽  
Content Type ◽  
Management Level ◽  
Rigorous Research ◽  
The Difference

Purpose The purpose of this paper is to investigate the mediation effect of Blue Ocean Leadership (BOL) activities between lean manufacturing (LM) practices and firm performance. Design/methodology/approach This study applied sequential mixed method with expert opinion in the first stage and cross-sectional survey from automotive vendor companies in the second stage. The samples were drawn using random sampling procedure from automotive vendor companies in Malaysia with the final number of respondents of 64. Four main hypotheses were developed and tested statistically by applying multivariate data analysis using SmartPLS3.0 SEM software. Findings The results provide evidence that LM practices have positive and significant impact on firm performance. Moreover, activities of Genba-Kaizen significantly improve the firm performance by an amazing 30 per cent. Research limitations/implications The data used in the survey represent self-reporting by mainly the top management in operations or production. It is recommended for future study to include middle and lower management level to understand the difference of their activities. Besides, it is proposed to extent the population beyond automotive industry. Practical implications This study contributes to the LM body of knowledge by identifying the relationships between the LM practices, firm performance and BOL activities. Understanding these will help lean practitioners especially the leaders in making better decision in both manufacturing and service organizations. Thus, increasing the staff motivation and engagement eventually contributes to the firm performance. Originality/value Although there are growing numbers of anecdotal and empirical evidences in favour of LM in manufacturing environment, there has been almost no theory-building and methodologically rigorous research examining the link between the leaders’ activities with LM practices and firm performance. This study is addressing such gaps.

Drivers of the disclosed “connectivity of the capitals”: evidence from integrated reports

2019 ◽  
Vol 10 (5) ◽  
pp. 877-908 ◽  
Author(s):  
Michael Grassmann ◽  
Stephan Fuhrmann ◽  
Thomas W. Guenther
Keyword(s):  
Content Analysis ◽  
Cost Benefit ◽  
Managerial Discretion ◽  
Integrated Reporting ◽  
Firm Level ◽  
Cross Sectional ◽  
Content Type ◽  
Proprietary Costs ◽  
Ir Studies ◽  
Quantitative Results

Purpose Integrated reporting (IR) aims to provide disclosures of the connectivity of non-financial and financial value creation aspects. These disclosures are defined as the disclosed connectivity of the capitals resulting from integrated thinking. This paper aims to investigate the extent of disclosed connectivity of the capitals in integrated reports and its underlying managerial discretion by drawing on economic-based theories. Design/methodology/approach Regression analyses are applied to examine the associations between economic firm-level characteristics and the extent of disclosed connectivity of the capitals. The analyses are based on a content analysis of 169 integrated reports disclosed in 2013 and 2014 by Forbes Global 2000 companies. Findings This paper finds high heterogeneity in the extent of disclosed connectivity of the capitals in current IR practice. This heterogeneity is related to drivers arising from economic-based theories. Firms’ non-financial and financial performance and the importance of strategic shareholders and debt providers are positively associated with the extent of disclosed connectivity of the capitals. The complexity of the business model and a highly competitive environment are negatively associated with the extent of disclosed connectivity of the capitals. Research limitations/implications This paper extends qualitative IR studies on the disclosed connectivity of the capitals by quantitative results from a content analysis for a cross-sectional and global sample. Additionally, this study adds to prior IR literature on the drivers of the binary decision to disclose an integrated report by focusing on the extent of disclosed connectivity of the capitals. Practical implications For report preparers, users and standard setters, the results reveal that perceived cost-benefit considerations (signaling vs. direct and proprietary costs) may explain managerial discretion regarding the connectivity of the capitals within integrated reports. Social implications This paper examines integrated reports, which are intended to inform providers of financial capital and other stakeholders about the connectivity of the six capitals of the IR framework. Originality/value This paper develops a metric disclosure measure of the extent of disclosed connectivity of the capitals. It provides initial evidence of how the IR framework’s focus on this key characteristic is realized in disclosure practice. Concerns about competitive disadvantages and preparation costs limit this key characteristic of integrated reports.

Determinants of return-on-equity in USA, German and Japanese manufacturing firms

2019 ◽  
Vol 45 (3) ◽  
pp. 445-451 ◽  
Author(s):  
Stephanie M. Weidman ◽  
Daniel J. McFarland ◽  
Gulser Meric ◽  
Ilhan Meric
Keyword(s):  
Manufacturing Industry ◽  
Financial Analysis ◽  
Important Determinant ◽  
Multivariate Regression Analysis ◽  
Manufacturing Firms ◽  
Firm Level ◽  
Cross Sectional ◽  
Content Type ◽  
Return On Equity ◽  
The Usa

Purpose DuPont financial analysis is generally used in micro-economic studies to compare an individual firm’s financial performance with industry averages. The purpose of this paper is to undertake a macro-economic cross-sectional analysis of the determinants of return-on-equity (ROE) in USA, German and Japanese manufacturing firms. Design/methodology/approach The authors use cross-sectional log-linear multivariate regression analysis to determine the elasticity of ROE to changes in net profit margin (NPM), total assets turnover (TAT) and equity multiplier (EQM) in USA, German and Japanese manufacturing firms. The authors obtain the data for the analysis from the COMPUSTAT Research Insight/Global Vintage database. Findings With data for all manufacturing firms, the authors find that the most important determinant of ROE is NPM in all three countries. The least important determinant of ROE is TAT in the USA and Germany, and EQM in Japan. Electronics is the most important manufacturing industry in all three countries, the authors also apply the analysis to data for the electronics manufacturing firms in the three countries. The authors find that an increase of 10 percent in NPM increases ROE by about 9.8 percent in Germany, by about 8.3 percent in the USA, and by about 6.9 percent in Japan. An increase of 10 percent in TAT increases ROE by about 2.2 percent in Germany and by about 1.5 percent in Japan. An increase of 10 percent in EQM increases ROE by about 1.9 percent in Germany and by about 1.5 percent in the USA. Practical implications The empirical findings of this study can provide useful insights for financial managers regarding the determinants of ROE they should focus on to achieve the greatest impact on ROE. Originality/value DuPont analysis is generally used as a micro-economic tool at the firm level. This study is a macro-economic application of the tool to study the cross-sectional determinants of ROE at the industry level.

Determinants of adoption of International Financial Reporting Standards in Ugandan micro finance institutions

2019 ◽  
Vol 10 (3) ◽  
pp. 336-355 ◽  
Author(s):  
Juma Bananuka ◽  
Zainabu Tumwebaze ◽  
Doreen Musimenta ◽  
Patience Nuwagaba
Keyword(s):  
Financial Reporting ◽  
African Country ◽  
Explanatory Power ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Microfinance Institutions ◽  
Cross Sectional ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Correlational Data

Purpose The purpose of this paper is to report on the results of a study carried out to establish the contribution of board of directors’ effectiveness, intellectual capital (IC) and managerial attitude to the adoption of International Financial Reporting Standards (IFRSs) in microfinance institutions (MFIs). Design/methodology/approach This study is cross-sectional and correlational. Data were collected through a questionnaire survey of 67 MFIs that are members of the Association of Microfinance Institutions of Uganda. The data were analyzed using statistical package for social sciences. Findings Both board of director’s effectiveness and IC positively and significantly contribute to the adoption of IFRSs. Managerial attitude is positively and significantly associated with the adoption of IFRSs, but its explanatory power is subsumed in IC. Originality/value To the authors’ knowledge, this is the first study to investigate the contribution of board of director’s effectiveness, IC and managerial attitude to the adoption of IFRSs in MFIs using evidence from a developing African country like Uganda.

Access to finance and firm innovation

2018 ◽  
Vol 10 (1) ◽  
pp. 73-94 ◽  
Author(s):  
MccPowell Sali Fombang ◽  
Charles Komla Adjasi
Keyword(s):  
South Africa ◽  
Trade Credit ◽  
Microfinance Institutions ◽  
African Countries ◽  
Access To Finance ◽  
Firm Level ◽  
Firm Innovation ◽  
Content Type ◽  
Level Data ◽  
Firm Level Data

Purpose The study aims to examine the importance of access to finance in firm innovation by using firm-level data from the World Bank enterprise survey (WBES) on selected African countries. Design/methodology/approach This study utilises firm-level data from the WBES database and computes aggregate innovation index by using multiple correspondent analysis. The authors then apply instrumental variable models (to control for possible endogeneity between innovation and finance) to assess the link between finance and innovation. Findings The research finds that finance in the form of overdraft overwhelmingly drives innovation in all selected countries – Cameroon, Kenya, Morocco, Nigeria and South Africa. Trade credit enhances innovation among firms in Nigeria, South Africa and Cameroon, while asset finance drives innovation amongst firms in Cameroon, Nigeria and South Africa. Practical implications Policy incentives such as tax breaks could be put in place for financial intermediaries that have shown proof of extending loans to financially constraint firms to enable them to innovate. Furthermore, different financial institutions such as microfinance institutions can be supported to increase credit to enterprises. Partnerships with organisations willing to fund firms and support start-ups should be encouraged. One of such support mechanisms could be specialised schemes such as a credit guarantee scheme to encourage and secure lending to enterprises to promote innovation. Originality/value This paper provides empirical insights into how finance enhances innovation in African enterprises. It also shows how different finance structures (overdraft, asset finance and trade credit) affect firm innovation in different African countries.

Financial service outreach correlates

2015 ◽  
Vol 42 (4) ◽  
pp. 404-420 ◽  
Author(s):  
Stephen Korutaro Nkundabanyanga ◽  
Julius Opiso ◽  
Waswa Balunywa ◽  
Isaac Nabeeta Nkote
Keyword(s):  
Risk Taking ◽  
Pearson Correlation ◽  
Financial Service ◽  
Mediating Effect ◽  
Mediation Effect ◽  
Microfinance Institutions ◽  
Cross Sectional ◽  
Content Type ◽  
Managerial Competence ◽  
The Relationship

Purpose – The purpose of this paper is to establish the relationship between managerial competence, managerial risk-taking behaviour and financial service outreach of microfinance institutions (MFIs). Design/methodology/approach – In this cross-sectional and correlational study, the authors surveyed 52 branches of MFIs from a population of 60 branches of 20 MFIs in eastern Uganda. Two respondents, a branch manager and a senior loan officer, were the units of enquiry for each branch. The authors put forward and tested four hypotheses relating to the significance of the relationship between perceived managerial competence, risk-taking behaviour and financial service outreach using SPSS version 20. The authors established the hypothesized relationships using Pearson correlation coefficients and obtain a mediating effect of risk-taking behaviour using partial corrections and regression analysis. Findings – The results suggest positive and significant relationships between perceived managerial competence, risk-taking behaviour and financial service outreach. However, while the direct relationship between managerial competence and financial service outreach without the mediation effect of risk-taking behaviour of managers was found to be significant, its magnitude reduces when mediation of risk-taking behaviour is allowed. Thus the entire effect does not only go through managerial competence but majorly also, through risk-taking behaviour of managers. Research limitations/implications – This study did not control for environmental factors such as laws and regulations. As such the model may have been under fitted. Nevertheless, the study has introduced a clearer understanding that outreach performance in MFIs rests with competent managers in strategic positions operating in synergy with their risk-taking behaviour. The study informs policy makers that outreach performance of the MFIs depends on the quality of the competence managers have in addition to their risk-taking propensities. Practical implications – Efforts by the stakeholders to improve financial service outreach must be matched with appropriate competences and risk-taking behaviour of managers. Originality/value – The results contribute to extant literature by investigating two explanatory variables for financial service outreach and provide initial evidence of the mediating effect of intrinsic high risk-taking behaviour of managers. Results add to the conceptual improvement in risk-taking behaviour and lend considerable support for the behavioural perspective in the study of financial service outreach of MFIs.

Sign in / Sign up

Export Citation Format

Share Document