Factors influencing the borrower loan size in microfinance group lending: a survey from Indian microfinance institutions

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sunil Sangwan ◽  
Narayan Chandra Nayak
Keyword(s):  
Size Variation ◽  
Primary Data ◽  
Individual Member ◽  
Limited Information ◽  
Microfinance Institutions ◽  
Group Lending ◽  
Content Type ◽  
Loan Size ◽  
The Cost ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of the cost of microfinance intermediation on borrowers’ loan size. The identified transaction cost and credit risk factors tell about what a lender takes into accounts while screening and allocating loan amounts to the borrowers, where the lender has limited information about the client’s ability to repay. Design/methodology/approach The analysis is based on the primary data collected from a sample of 498 microfinance institutions (MFI) linked group clients covering two microfinance leading states of India. Findings Empirical findings suggest that the cost of microfinance intermediation has an impact on borrowers’ loan size. To reduce the cost, the MFIs lend big loans to clients having a high income, assets, land size, lower informal borrowings and having longer loan experiences. In MFI lending, the younger and less educated people are the ones who demand bigger loan amounts. The geographical distance of borrowers’ location from MFI offices, group size and interest rate are the other factors that influence the loan size. Originality/value The past empirical works seem to have not focused on how the cost of microfinance intermediation creates loan size variation among the borrowers in joint liability group lending. The endogeneity problem has not been resolved. The present article thus identifies the factors that influence the individual member loan size by using two-stage least squared regression to tackle the issue of endogeneity.

The impact of microfinance programs on monetary poverty reduction

2019 ◽  
Vol 16 (1) ◽  
pp. 30-43
Author(s):  
Mustafa Hassan Elsafi ◽  
Elsadig Musa Ahmed ◽  
Santhi Ramanathan
Keyword(s):  
Poverty Reduction ◽  
Poverty Line ◽  
Control Group ◽  
Microfinance Institutions ◽  
Content Type ◽  
Welfare Indicators ◽  
The Difference ◽  
Loan Size ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of microfinance programs sponsored by Sudanese microfinance institutions (SMFIs) on monetary poverty reduction in Sudan where poverty is widely spread. Design/methodology/approach The study adopted the control group approach, where income and expenditure are taken as welfare indicators. The updated World Bank’s international poverty line of 1.90 per person per day was adopted to separate the poor from non-poor. The data were collected by the means of a questionnaire distributed to a random sample of beneficiaries in the institution under study. The study adapted the Foster, Greer and Thorbecke (FGT) model to evaluate the role of microfinance programs in poverty reduction. Furthermore, to gain more insight into the impact of the program, a preliminary analysis was conducted using the independent-samples t-test to examine the difference in the welfare indicators for the sample of the control group and treatment group as well as that of the small loan group and micro-loan group. Findings The findings show that the microfinance program provided by SMFIs has reduced the monetary poverty among the participants. The results also reveal that beneficiaries who had received a larger volume of loan were noted lesser poverty than those who had received very small loan size. Moreover, the results demonstrate that poverty indices based on expenditure as a welfare indicator are far lower than those based on income for both groups. Originality/value This study contributes to the available literature by filling the gaps through including income and expenditure as monetary variables, which included separately in previous studies adopted the FGT model in the area of microfinance, in addition to exploring the role of loan size in the effect of microfinance on poverty reduction.

Islamic microfinance in Mauritania: an investigation into involuntary factors affecting usage

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vatimetou Mokhtar Maouloud ◽  
Salina Kassim ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
Structural Equation ◽  
Financial Inclusion ◽  
Primary Data ◽  
Microfinance Institutions ◽  
Cross Sectional ◽  
Content Type ◽  
Factors Affecting ◽  
Specific Dimension ◽  
Islamic Microfinance ◽  
The Impact

Purpose This study aims to identify the involuntary barriers of financial inclusion which are affecting the usage of Islamic microfinance services in PROCAPEC institution located in Nouakchott-Mauritania. Subsequently, it also examines the effect of gender as a moderator in the model. Design/methodology/approach Primary data was collected through a cross-sectional questionnaire from 381 beneficiaries of PROCAPEC – a major Islamic microfinance provider in Mauritania. In methodology, the study uses confirmatory factor analysis to identify relevant involuntary factors affecting usage, followed by structural equation modelling to test the impact of these factors on the usage of Islamic microfinance (IsMF) products. Findings Two of the four factors are statistically significant in affecting the usage of IsMF products, namely, affordability and eligibility. Gender is a moderator in the relationship between affordability and usage, as well as eligibility and usage. Practical implications Policymakers, practitioners and managers of Islamic microfinance institutions can consider these factors and focus on strategies, including pricing and promotion, which aim to further develop the Islamic microfinance industry in Mauritania. Also, reducing documentation required from clients and adopting lenient rules to provide suitable products will enhance the use of IsMF products, which may lead to more customers’ attraction. Originality/value Although several researchers have articulated financial inclusion, this study sheds light on a specific dimension of financial inclusion to determine the factors impacting IsMF products’ usage. In Mauritania, there are few studies about microfinance. This study will be amongst the pioneer contribution to the geographical gap.

The role of innovation in building competitive advantages: an empirical investigation

2018 ◽  
Vol 21 (1) ◽  
pp. 44-69 ◽  
Author(s):  
Prodromos Chatzoglou ◽  
Dimitrios Chatzoudes
Keyword(s):  
Competitive Advantage ◽  
Conceptual Framework ◽  
Empirical Investigation ◽  
Primary Data ◽  
Empirical Literature ◽  
Competitive Advantages ◽  
Manufacturing Companies ◽  
Content Type ◽  
The Impact ◽  
Structured Questionnaire

Purpose Nowadays, innovation appears as one of the main driving forces of organisational success. Despite the above fact, its impact on the propensity of an organisation to develop and sustain a competitive advantage has not yet received sufficient empirical investigation. The purpose of this paper is to enhance the existing empirical literature by focusing on the antecedents of innovation and its impact on competitive advantage. It proposes a newly developed conceptual framework that adopts a three-step approach, highlighting areas that have rarely been simultaneously examined before. Design/methodology/approach The examination of the proposed conceptual framework was performed with the use of a newly developed structured questionnaire that was distributed to a group of Greek manufacturing companies. The questionnaire has been successfully completed by chief executive officers (CEOs) from 189 different companies. CEOs were used as key respondents due to their knowledge and experience. The reliability and the validity of the questionnaire were thoroughly examined. Empirical data were analysed using the structural equation modelling technique. The study is empirical (based on primary data), explanatory (examines cause and effect relationships), deductive (tests research hypotheses) and quantitative (includes the analysis of quantitative data collected with the use of a structured questionnaire). Findings Results indicate that knowledge management, intellectual capital, organisational capabilities and organisational culture have significant direct and indirect effects on innovation, underlining the importance of their simultaneous enhancement. Finally, the positive effect of innovation on the creation of competitive advantages is empirically validated, bridging the gap in the relevant literature and offering avenues for additional future research. Originality/value The causal relationship between innovation and competitive advantage, despite its significant theoretical support, has not been empirically validated. The present paper aspires to bridge this gap, investigating the impact of innovation on the development of competitive advantages. Moreover, the present study adopts a multidimensional approach that has never been explored in the existing innovation literature, making the examination of the proposed conceptual framework an interesting research topic.

The impact of labor freedom on geographic cost of living differentials

2017 ◽  
Vol 6 (3) ◽  
pp. 385-395
Author(s):  
Richard Cebula ◽  
James E. Payne ◽  
Donnie Horner ◽  
Robert Boylan
Keyword(s):  
Labor Market ◽  
State Level ◽  
The State ◽  
Annual Data ◽  
Significant Finding ◽  
Cost Of Living ◽  
Content Type ◽  
The Usa ◽  
The Cost ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of labor market freedom on state-level cost of living differentials in the USA using cross-sectional data for 2016 after allowing for the impacts of economic and quality of life factors. Design/methodology/approach The study uses two-stage least squares estimation controlling for factors contributing to cost of living differences across states. Findings The results reveal that an increase in labor market freedom reduces the overall cost of living. Research limitations/implications The study can be extended using panel data and alternative measures of labor market freedom. Practical implications In general, the finding that less intrusive government and greater labor freedom are associated with a reduced cost of living should not be surprising. This is because less government intrusion and greater labor freedom both inherently allow markets to be more efficient in the rationalization of and interplay with forces of supply and demand. Social implications The findings of this and future related studies could prove very useful to policy makers and entrepreneurs, as well as small business owners and public corporations of all sizes – particularly those considering either location in, relocation to, or expansion into other markets within the USA. Furthermore, the potential benefits of the National Right-to-Work Law currently under consideration in Congress could add cost of living reductions to the debate. Originality/value The authors extend the literature on cost of living differentials by investigating whether higher amounts of state-level labor market freedom act to reduce the states’ cost of living using the most recent annual data available (2016). That labor freedom has a systemic efficiency impact on the state-level cost of living is a significant finding. In our opinion, it is likely that labor market freedom is increasing the efficiency of labor market transactions in the production and distribution of goods and services, and acts to reduce the cost of living in states. In addition, unlike previous related studies, the authors investigate the impact of not only overall labor market freedom on the state-level cost of living, but also how the three sub-indices of labor market freedom, as identified and measured by Stansel et al. (2014, 2015), impact the cost of living state by state.

Financial and social efficiency analysis of Islamic microfinance institutions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marwa Fersi ◽  
Mouna Bougelbène
Keyword(s):  
Capital Structure ◽  
Credit Risk ◽  
Risk Taking ◽  
Negative Impact ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Content Type ◽  
Islamic Microfinance ◽  
The Impact ◽  
The Relationship

PurposeThe purpose of this paper was to investigate the impact of credit risk-taking on financial and social efficiency and examine the relationship between credit risk, capital structure and efficiency in the context of Islamic microfinance institutions (MFIs) compared to their conventional counterparts.Design/methodology/approachThe stochastic frontier approach was used to estimate the financial and social efficiency scores, in a first step. In a second step, the impact of risk-taking on efficiency was evaluated. The authors also took into account the moderating role of capital structure in this effect using the fixed and random effects generalized least squares (GLS) with a first-order autoregressive disturbance. The used dataset covers 326 conventional MFIs and 57 Islamic MFIs in six different regions of the world over the period of 2005–2015.FindingsThe overall average efficiency scores are less than 50%, where CMFIs could have produced their outputs using 48% of their actual inputs. IMFIs record the lowest financial (cost) efficiency that is equal to 28% on average. The estimation results also reveal a negative impact of nonperforming loan on financial and social efficiency. Finally, the moderating effect of leverage funding on the relationship between credit risk-taking and financial efficiency was confirmed in CMFIs. However, leverage seems to moderate the effect of risk-taking behavior on social efficiency for IMFIs.Originality/valueThis paper makes an initial attempt to evaluate the effect of risk-taking decision and its implication on efficiency and MFIs' sustainability. Besides, it takes into consideration the role played by the mode of governance through the ownership structure. In addition, this research study sheds light on the importance of the financial support for the development and sustainability of these institutions, which in return, contributes to a sustainable economic development.

People-centred management for improving construction workers' productivity in Zimbabwe

2021 ◽  
Vol 11 (2) ◽  
pp. 350-368
Author(s):  
Tirivavi Moyo ◽  
Gerrit Crafford ◽  
Fidelis Emuze
Keyword(s):  
Labour Productivity ◽  
Construction Workers ◽  
Primary Data ◽  
Related Factors ◽  
Content Type ◽  
Construction Companies ◽  
The People ◽  
Significant Difference ◽  
High Concern ◽  
The Impact

PurposeWhile operational factors reduce construction workers' productivity in Zimbabwe, the impact of the people-centred management aspects has not been empirically interrogated as a remedy. This article reports on a study that sought to determine significant people-centred management aspects that lead to improved labour productivity and assesses the existence of statistically significant differences due to the demographic variables of respondents. Demographic-specific strategies that enhance construction “workers” productivity were revealed.Design/methodology/approachThe survey research design using a self-administered questionnaire was deployed to collect the primary data. The design followed a positivist paradigm to evaluate objectively how people-centred management affects construction workers' productivity. The statistical data were descriptively and inferentially analysed.FindingsPeople-centred management was determined to be significant in improving construction workers' productivity, with the most significant aspect being the building of employee confidence in related approaches. Designations and educational levels mostly indicated a statistically significant difference in several aspects that included the adoption of a functional reward culture for workers and training on people-centred principles. Training on-site management and construction workers in people-centred management and its application are crucial to improving construction workers' productivity.Research limitations/implicationsConstruction companies should drastically improve their concern for people while they sustain a high concern for production within their construction sites. Although several factors affect construction workers' productivity, this study determined that management-related factors and people-centred management were significant towards influencing low productivity in Zimbabwe.Originality/valueThe study determined people-centred management and demographic-specific interventions as being able to improve construction workers' productivity in Zimbabwe.

What drives credit risk of microfinance institutions? International evidence

2017 ◽  
Vol 13 (5) ◽  
pp. 541-559 ◽  
Author(s):  
Naima Lassoued
Keyword(s):  
Credit Risk ◽  
Institutional Environment ◽  
Microfinance Institutions ◽  
Group Lending ◽  
Content Type ◽  
Random Effects Models ◽  
Credit Quality ◽  
Country Level ◽  
Enforcement Cost ◽  
Practical Implications

Purpose The purpose of this paper is to shed light on the factors that affect microfinance institutions’ (MFI) credit risk. These factors include MFIs’ characteristics and country-level indicators. Design/methodology/approach This empirical study uses an unbalanced panel data of 638 MFIs from 87 countries observed over a period ranging from 2005 to 2015. Random-effects models are used to estimate the models. Findings The results reveal that group-lending methodology, percent of loan granted to women and diversification activities reduce credit risk; credit quality is enhanced by the relevance of the information published by public or private bureaus and law enforcement cost increases credit risk. Finally, credit risk tends to be limited in a good institutional environment. Practical implications Several implications can be drawn in light of these findings. For MFIs’ managers, using group lending or granting more credit to women and diversifying their activities enhance their credit quality. Furthermore, authorities need to strength debt repayment institutions and reinforce institutional environment to help MFIs to limit their credit risk. Originality/value Previous studies focus on specific MFIs’ practices that enhance repayment rate or on country-level indicators. One of the contributions of this paper is the use of both types of indicators.

The impact of law, religion, and culture on the ease of starting a business

2018 ◽  
Vol 21 (4) ◽  
pp. 242-257 ◽  
Author(s):  
Dana L. Haggard ◽  
K. Stephen Haggard
Keyword(s):  
Economic Development ◽  
Political Stability ◽  
Cultural Dimension ◽  
Legal Origin ◽  
Content Type ◽  
Dynamic Factors ◽  
New Business ◽  
The Cost ◽  
The Impact ◽  
Starting A Business

Purpose The purpose of this paper is to examine the effects of culture, legal origin and religion on four measures of the ease of starting a new business; the number of procedures required, the number days required, the ease of getting credit and the cost to start a business. Design/methodology/approach The authors use linear regression to test the hypotheses using publicly available data on legal origin and religion from La Porta et al. (1999), cultural dimension information from Hofstede (2009) and measures of the ease of starting a business from the World Bank’s (2017) Doing Business Initiative. The final sample consists of 71 countries for which information was available on all the variables of interest. Findings Legal origin affects the number of procedures and the length of time needed to start a business, as well as the ease of getting credit. Culture (power distance) and religion are important for explaining gender differences in the ease of starting a business. The cost of starting a business is unrelated to culture, legal origin or religion. Originality/value Economic development is an important determinant of a country’s political stability and standard of living. Although politicians play a significant role in how a friendly a country is toward business, the study demonstrates that other longer-term and less dynamic factors have a material influence on economic development.

scholarly journals Microfinancing, governance, and performance: a South Asian perspective

2018 ◽  
Vol 23 (46) ◽  
pp. 247-265 ◽  
Author(s):  
Asif Saeed ◽  
Attiya Y. Javed ◽  
Umara Noreen
Keyword(s):  
South Asian ◽  
Social Performance ◽  
Bank Regulation ◽  
Chief Executive ◽  
Microfinance Institutions ◽  
Board Size ◽  
Content Type ◽  
Urban Market ◽  
And Performance ◽  
Loan Size

Purpose This paper aims to investigate the relationship between microfinance institutions (MFIs) governance and performance. Design/methodology/approach Using a sample of 215 MFIs from six South Asian countries over the period from 2005 to 2009, the authors examine the effect of chief executive officer (CEO) duality, board size, female CEO, urban market coverage, bank regulation and lending type on financial and social performance of MFIs. Findings The findings provide evidence that, on the one hand, empowered CEO, large board size and individual lending improve the MFI financial performance and, on another hand, bank regulation and serving in the urban market have a significant association with MFIs’ social performance. In an additional analysis, the authors also test this relationship before, during and after the financial crisis of 2007. During crisis period, MFIs’ individual lending reduces the operational cost and bank regulation increases the average loan size in South Asian MFIs. Originality/value Those studies that are presented in the literature review conclude their result on the bases of global, European, East African and specific to some countries sample. There is no study presented in the whole literature on South Asian sample, in which all countries really face the problem of poverty.

scholarly journals Credit composition and income inequality in Vietnam: an empirical analysis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Le Quoc Hoi ◽  
Hương Lan Trần
Keyword(s):  
Income Inequality ◽  
Educational Level ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Primary Data ◽  
Data Set ◽  
Content Type ◽  
Private Credit ◽  
The Impact

PurposeThis paper aims to examine the credit composition and income inequality reduction in Vietnam. In particular, the authors focus on the distinction between policy and commercial credits and investigate whether these two types of credit had adverse effects on income inequality. The authors also examine whether the impact of policy credit on income inequality is conditioned by the educational level and institutional quality.Design/methodology/approachThe authors use the primary data set, which contains a panel of 60 provinces collected from the General Statistics Office of Vietnam from 2002 to 2016. The authors employ the generalized method of moments to solve the endogenous problem.FindingsThe authors show that while commercial credit increases income inequality, policy credit contributes to reducing income inequality in Vietnam. In addition, we provide evidence that the institutional quality and educational level condition the impact of policy credit on income inequality. Based on the findings, the paper implies that it was not the size of the private credit but its composition that mattered in reducing income inequality, due to the asymmetric effects of different types of credit.Originality/valueThis is the first study that examines the links between the two components of credit and income inequality as well as constraints of the links. The authors argue that analyzing the separate effects of commercial and policy credits is more important for explaining the role of credit in income inequality than the size of total credit.

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