System dynamics to turnaround an Indian microfinance institution

Kybernetes ◽  
2016 ◽  
Vol 45 (3) ◽  
pp. 411-433
Author(s):  
Ritika Singh ◽  
Chandan Bhar
Keyword(s):  
System Dynamics ◽  
Performance Indicators ◽  
Social Performance ◽  
Financial System ◽  
Quantitative Model ◽  
Microfinance Institutions ◽  
Content Type ◽  
Long Run ◽  
Microfinance Institution ◽  
Corporate Model

Purpose – The purpose of this paper is to present a policy comparison tool for Indian Microfinance Institutions (MFIs) so that they can choose the best policy for implementation. It provides for turnaround of a troubled MFI by analyzing the performance of different policies. Design/methodology/approach – The paper has done a web survey to identify the need of a strategic tool for MFI. It has built a Decision Support System (DSS) using system dynamics. A corporate model of MFI has been constructed using iThink 10.0.2 software. A quantitative validity test has been done to find the robustness of the model. Finally four policies are tested and the performance indicators have been used to suggest the best policy. Apart from this DSS is used to test the implementation range of a policy. Findings – “Integration of Microfinance with country’s mainstream financial system along with provisioning 1 percent of outstanding loans” is recommended for the MFI as this will increase the financial performance. Research limitations/implications – In its present form the corporate model developed for MFI is not applicable for judging social performance. Therefore MFIs might be sceptic toward it. However, incorporation of certain performance indicators such as financial-self-sufficiency ratio might help in overcoming this reluctance. Practical implications – “Integration of Microfinance with country’s mainstream financial system along with restricting provision” will generate better performance for the MFI. Therefore this policy should be implemented by the MFI. There are other considerations which need to be taken into account while implementing this policy. The integration may require outsourcing of certain operations to banks, utilization of bank branches to disseminate knowledge related to the conduct of transactions, usage of customized bank software to handle the day-to-day business, development of new softwares for mobile messaging to help poor customers avail of schemes run by the banks, fill loan application forms online, send reminders for loan recovery; provide incentives such as upgradation of poor customers to become regular customers of banks. Social implications – By improving the health of the MFI a bigger goal to reach the poor will be achieved in the long run. The MFI has around five million clients at present and if the company becomes insolvent then the future of these clients is going to be impacted. The organization has interacted closely with these clients and therefore knows how to upgrade their financial state. Originality/value – The tool is first of its kind in the microfinance industry. So far the microfinance technology providers have dealt with Management Information System and Information and Communication Technology. The tool has been built to present a quantitative model for overall operations of the MFI. The simulation of this model helps in predicting future scenarios.

An integrated framework for analysing performance indicators of Indian microfinance institutions: a multi-stakeholder perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amit Kumar Bardhan ◽  
Barnali Nag ◽  
Chandra Sekhar Mishra ◽  
Pradeep Kumar Tarei
Keyword(s):  
Decision Making ◽  
Financial Performance ◽  
Performance Indicators ◽  
Social Performance ◽  
Microfinance Institutions ◽  
Dyadic Relationship ◽  
Content Type ◽  
Integrated Framework ◽  
Overall Performance ◽  
Performance Dimensions

PurposeAn amalgamation of Decision-Making Trial and Evaluation Laboratory (DEMATEL) and Analytical Network Process (ANP) has been performed to develop a decision-making framework for improving the overall performance of the microfinance institutions. A primary survey was conducted to collect real-time data from the heterogeneous stakeholders of microfinance institutions across India. The validation of the proposed framework is performed by comparing the results against the conventional method of Analytical Hierarchy Process (AHP).Design/methodology/approachThis study identifies various dimensions and indicators for measuring the performance of Indian microfinance institutions. Additionally, the ranking and prioritisation of the performance dimensions and indicators is obtained by considering the mutual interrelation between them.FindingsThe study indicates that there exists a significant dyadic relationship between financial performance and social performance for improving the overall performance of the microfinance institutions. Governance is found to unidirectionally influence both financial and social performance. Among all the considered dimensions, financial performance of a microfinance institution is the most critical dimension for improving the overall performance. The top five performance indicators of the Indian microfinance institutions are funding source, borrowing and overhead cost, size of the firm, end-use of the money and depth of outreach.Research limitations/implicationsThe study was conducted in the context of Indian microfinance institutions; hence the scope of generalisation of the results is limited. This research considers both subjective and objective aspect of the performance dimensions and indicators from the perspective of multiple stakeholders (i.e. firm, society and regulator). The integrated framework is expected to aid in improving overall performance of microfinance institutions by focusing on the most critical (high prioritised) performance indicators.Originality/valueAn integrated DEMATEL-ANP framework is used in the domain of microfinance to assess the performance dimensions. This study is unique in terms of analysing performance of microfinance institutions from the perspective of heterogeneous stakeholders.

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.

Knowledge mapping of microfinance performance research: a bibliometric analysis

2021 ◽  
Vol 48 (3) ◽  
pp. 399-418
Author(s):  
Shabiha Akter ◽  
Md Hamid Uddin ◽  
Ahmad Hakimi Tajuddin
Keyword(s):  
Financial Performance ◽  
Bibliometric Analysis ◽  
Social Performance ◽  
Credit Scoring ◽  
Basic Research ◽  
Future Research ◽  
Knowledge Mapping ◽  
Microfinance Institutions ◽  
Content Type ◽  
Bibliometric Review

PurposePerformance assessment of microfinance institutions (MFIs) has long been a question of considerable research interest. The dual goals – financial performance and social performance of MFIs widely studied yet remain unsolved in the existing literature. To assess the knowledge structure of research in this area and to aid future research, we review the literature with bibliometric analysis.Design/methodology/approachOur study has used bibliographic data of 1,252 scientific documents indexed in the Scopus database from 1995 to 2020 (June 05). We have used the “bibliometrix” package in R language to analyze the data and illustrate the findings.FindingsWe find that there has been an increasing trend in publications, especially from 2006 onwards. Various bibliometric indicators allow us to follow the progression of knowledge along with identifying the most contributing and impactful authors, publication sources, institutions and countries. We illustrate the major research themes and identify that “poverty alleviations”, “group lending” and “credit scoring” are the major emerging and specialized themes besides the basic research evolved around “microfinance” or “microcredit”. Our further analysis of thematic evolution over different time frames reveals that “financial performance” aspect is getting more attention in recent times in evaluating the performance of MFIs.Originality/valueThe insights of knowledge accumulated from our bibliometric review and thematic analysis provide researchers with an efficient comprehension of the advancement of the research on microfinance performance and offer avenues for future scientific endeavors.

scholarly journals The impact of social media on the performance of microfinance institutions in developing countries: a quantitative approach

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmad Daowd ◽  
Muhammad Mustafa Kamal ◽  
Tillal Eldabi ◽  
Ruaa Hasan ◽  
Farouk Missi ◽  
...  
Keyword(s):  
Social Media ◽  
Developing Countries ◽  
Performance Indicators ◽  
Financial Services ◽  
Microfinance Institutions ◽  
Poverty Level ◽  
Content Type ◽  
Media Platform ◽  
Media Applications ◽  
The Impact

PurposeOver the last few decades, microfinance industry is argued to have played a constructive role in alleviating poverty level and providing the underprivileged with access to financial services. Statistics from the World Bank reveal that, currently, only 4% of the underprivileged have been served out of the 3 billion+ potential clients. Such results are due to several claims, particularly the operational and financial challenges faced by microfinance institutions (MFIs) in the constant flux inviting more attentions towards its performance. While explicit attention is given by many researchers towards mobile banking and information and communication technology (ICT) in improving the MFIs’ performance, the study on how social media, as a rapidly growing online phenomenon, can impact on the MFIs’ performance remains scarce. As such, this study aims to investigate this impact based on four dimensional performance indicators: efficiency, financial sustainability, portfolio quality and outreach.Design/methodology/approachA model is proposed and tested to ascertain the relationship between social media applications and organisational performance. In so doing, web-based questionnaires have been used to collect data from MFI employees in developing countries. Results reveal a significant influence of the social media over the MFIs’ performance, offering valuable insights into both researchers and practitioners in the domain of microfinance, as well as social media—conforming that the adoption of social media as marketing, advertising and communication tools may significantly improve the MFIs’ performance.FindingsThe results demonstrate that there is a positive and significant impact of social media use within microfinance on the key indicators of MFIs. They also show that the highest impact of social media usage within the microfinance is on the portfolio quality. In addition, it was found that marketing and advertising; communication and sales and distribution are the main areas where social media is able to support while social networking websites are the most popular platforms employed in MFIs.Originality/valueThis study adds to the existing literature few theoretical and practical aspects. First, this study developed a model for assessing the value of social media as a new phenomenon within this type of organisation. Second, it offers microfinance sponsors, managers and policy makers with a frame of reference to understand what social media platform can be deployed for each purpose. Third, with the identification of the main MFIs’ performance indicators, this research provided a reference of performance measurement guide for microfinance industry when assessing different technological employment.

scholarly journals Does financial system development, capital formation and economic growth induces trade diversification?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sohail Amjed ◽  
Iqtidar Ali Shah
Keyword(s):  
Economic Growth ◽  
System Development ◽  
Negative Relationship ◽  
Financial System ◽  
Capital Formation ◽  
Sultanate Of Oman ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
Oil Sector

PurposeThe purpose of this study is to investigate long-run and short-run relationships between trade diversification, financial system development, capital formation and economic growth.Design/methodology/approachARDL estimation approach is applied to analyze long-run and short-run relationships between the financial system development, capital formation, economic growth and trade diversification in case of the Sultanate of Oman over the period 39 years starting from 1979 till 2017.FindingsThe results show that financial system development and economic growth has a positive impact on trade diversification in the short-run and long-run. However, capital formation has a negative impact on trade diversification in the short run and long run. The negative relationship between trade diversification and capital formation implies that over the period of study, the investment in capital goods was made to enhance the production capacity of the oil sector to maximize revenue.Research limitations/implicationsThis research is limited to analyze long-run and short-run relationship between the financial system development, capital formation and economic growth and trade diversification in case of Sultanate of Oman.Practical implicationsTo achieve the diversification goal, the policymakers need to formulate policies to strengthen the financial system and invest in infrastructure development to promote the non-oil sector. The research findings of this study will provide insights to the policymakers to formulate an effective diversification policy.Originality/valueThis research contributes to the existing literature by providing empirical evidence of the short-run and long-run analysis of the selected variables in the context of an oil-dependent country.

scholarly journals Integrating performance measurement, system dynamics, and problem-solving methods

2019 ◽  
Vol 69 (5) ◽  
pp. 939-961
Author(s):  
Dian Prama Irfani ◽  
Dermawan Wibisono ◽  
Mursyid Hasan Basri
Keyword(s):  
Problem Solving ◽  
System Dynamics ◽  
Performance Measurement ◽  
Performance Indicators ◽  
Performance Measurement System ◽  
Dynamics Model ◽  
Content Type ◽  
Improvement Plan ◽  
Sea Transportation ◽  
Transport Logistics

Purpose Transport logistics systems in companies with additional public service roles are complex and could benefit from new approaches to performance management. Existing approaches tend to be fragmented; thus, the purpose of this paper is to integrate balanced performance measures, a dynamics model, and the problem-solving method into a new model. Design/methodology/approach An integrated framework is developed by reviewing literature and synthesising attributes of performance measurement systems, system dynamics and problem-solving methods. The framework is then applied to a multiple-role company’s sea transportation system. The study uses statistical methods to identify performance indicators, management interviews with document study to develop a dynamics model, and simulation methods to formulate an improvement plan. Findings The performance measurement design stage allowed for the identification of balanced, aligned performance indicators, while the system dynamics model illuminated the impact of the system components’ interrelationships on performance output. The problem-solving method allowed for analysis of system performance, identification of constraints and formulation of a performance improvement plan. Practical implications This framework can help transport logistics system stakeholders in multiple-role companies avoid silo thinking, misaligned performance objectives, local optima and short-term solutions. Originality/value This study contributes to the existing body of research by introducing a novel framework integrating performance measurement, system dynamics and the problem-solving method. It also addresses a theoretical gap by showing how interconnecting components of sea transportation systems affect transport logistics performance.

Women’s presence in top management and the performance of microfinance institutions in West Africa

2019 ◽  
Vol 47 (2) ◽  
pp. 207-222 ◽  
Author(s):  
Hamadou Boubacar
Keyword(s):  
Peer Review ◽  
Social Performance ◽  
West African ◽  
Senior Management ◽  
Social Orientation ◽  
Top Management ◽  
Microfinance Institutions ◽  
Content Type ◽  
The Social ◽  
The Impact

Purpose The purpose of this paper is to investigate the relationship between the presence of women in senior management and the performance of microfinance organizations in the West African Economic and Monetary Union (WAEMU). Design/methodology/approach Using a data set of 266 microfinance institutions (MFIs) for the period 2013–2017, the study assesses the impact of women’s representation in senior management and on the boards of West African MFIs on these institutions’ financial and social performance. Findings The results indicate that board size and diversity positively and significantly affect the social performance of MFIs, particularly in relation to women’s participation in decision-making regarding expanding services to poor people. In essence, greater gender diversity at the board and management levels promotes the social orientation of MFIs. Research limitations/implications The low representation of women on boards and as managers makes it difficult to more accurately determine the true impact of women in senior positions on MFIs performance. Practical implications The author recommends minimum quotas for women in the top management of MFIs. This would help these institutions incorporate key skills and actively involve all members. Also, regulation places constraints on the ability of West African MFIs to mobilize deposits and this negatively impacts their financial performance. Originality/value This investigation highlights the importance of including women in the top management of MFIs to improve these institutions’ performance. It also underscores an interesting problem and answers questions raised in the existing literature by either rejecting or confirming the findings. As players in the microfinance sector recognize that board diversity is important for the success of any microfinance institution, this paper helps shed light on the situation of these organizations in the WAEMU. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-06-2019-0365

Double bottom line commitments of microfinance: evidence from Indian institutions

2019 ◽  
Vol 46 (1) ◽  
pp. 116-131 ◽  
Author(s):  
Prasenjit Roy ◽  
Ambika Prasad Pati
Keyword(s):  
Legal Status ◽  
Individual Characteristics ◽  
Microfinance Institutions ◽  
Bottom Line ◽  
Data Set ◽  
Causal Factors ◽  
Content Type ◽  
Governmental Organization ◽  
Long Run ◽  
The Individual

Purpose The purpose of the paper is to confirm the adherence of double bottom line objectives by the microfinance institutions (MFIs) of India and, further, to identify the causal factors that work out their double bottom line commitments. Design/methodology/approach The study uses an empirical data set for the period of 10 years, i.e. from 2005–2006 to 2014–2015, gathered from www.mixmarket.org. It follows an exploratory approach with overall and segmented performance analysis. Further, a panel data regression model is applied to identify the causal factors of double bottom line. Findings The study finds that MFIs are adhering to the notion of double bottom line. The segregated analysis does not give any solid indications of trade-off. The mature and small MFIs are found to be better in attaining social objective but the new and large are better in sustainability. The non-governmental organization (NGO) category is more committed to the double bottom line than the non-NGO. The causal analysis could not show any relationship between financial performance and outreach. Though age and outreach size show relationships with small loan sizes, they do not influence sustainability. The operating and financial expenses along with portfolio quality are found to be the main causal variables of sustainability. Practical implications There are indications for the policy makers to frame regulations and prepare a roadmap for the mature and the large MFIs. This would help them adhere to the double bottom line, which would further streamline the operations of the MFIs in the long run. Containing operating expenses and controlling the asset quality still remain to be the challenges which need to be addressed with proper policy guidelines. Originality/value The analysis of the study focuses on industry classifications, which make it more intriguing in nature given the fact of the varied features like age, legal status and outreach. India being the largest microfinance market in the world has limited studies. Most of the studies in double bottom line are based on a cross-country analysis, which generalizes the individual characteristics. The study fills this gap and adds to the understanding of the double bottom line commitments in the Indian context.

Systems approach to complex systems modelling with special regards to tourism

Kybernetes ◽  
2006 ◽  
Vol 35 (7/8) ◽  
pp. 1048-1058 ◽  
Author(s):  
Tadeja Jere Lazanski ◽  
Miroljub Kljajić
Keyword(s):  
Complex Systems ◽  
System Dynamics ◽  
Systems Approach ◽  
Quantitative Model ◽  
Point Of View ◽  
Verbal Description ◽  
Content Type ◽  
Qualitative Models ◽  
Complex Systems Modelling ◽  
Global And Local

PurposeThe importance of context dependent modelling of complex systems, depending on the observer's point of view will be discussed. Thus, context is synonymous for the content of a problem in a frame of the goals, starting points and ways to achieve these aims. In this light, difficulties of model validation and a general method how to overcome them was discussed. The relations among subject – object – model in the light of a systems approach; Charles Sanders Peirce's triad principle and the semiotic principle of communication was presented.Design/methodology/approachThe appropriateness of a system dynamics methodology, which is due to its transparency and clarity an excellent tool for modelling of complex systems.FindingsIn the paper the equivalence of different methodologies was shown, whose differences and similarities can be judged only in context of a problem and the aims of researches. For illustration, the methodology is applied to a tourism system, which possesses the typical properties of global and local organisations. A verbal description of a tourism problem is followed by a causal loop diagram, which helps to discuss the problem categorically.Practical implicationsAs the methodology is implemented using quantitative model and POWERSIM tools; it offers the solution of national tourism strategy implication, selected from different scenarios.Originality/valueThis paper presents a simulation model of the tourism in a frame of system dynamics, developed from qualitative models, as an illustration of the discussed methodology.

Hybrid fuzzy-system dynamics approach for quantification of the impacts of construction claims

2019 ◽  
Vol 26 (7) ◽  
pp. 1261-1276 ◽  
Author(s):  
Farnad Nasirzadeh ◽  
David G. Carmichael ◽  
Mohammad Jafar Jarban ◽  
Mozhdeh Rostamnezhad
Keyword(s):  
System Dynamics ◽  
Influencing Factors ◽  
Fuzzy System ◽  
Construction Projects ◽  
Complex Structure ◽  
Quantitative Model ◽  
Related Structure ◽  
Flexible Tool ◽  
Content Type ◽  
Construction Claims

Purpose The purpose of this paper is to present a novel hybrid fuzzy-system dynamics (SD) approach for the quantification of the impacts of construction claims. Design/methodology/approach The most significant claims affecting a project are identified. The various factors affecting the impacts of claims are identified. Then, the qualitative model of construction claims is constructed considering the complex inter-related structure of the influencing factors. The mathematical relationships among the variables are determined and the quantitative model of claims is built. Finally, fuzzy logic is integrated into the proposed model to take into account the existing uncertainties. Findings To show the capabilities of the proposed simulation model, it is implemented on a real project and the impacts of the identified claims on the project cost are quantified. It is shown that the external interactions among different claims can intensify their overall impact. Research limitations/implications Identification of interactions among various influencing factors is not an easy job when there are a large number of claims in a project. Well-qualified experts and the existence of historical data may limit the application of the proposed method in projects with limited data and/or qualified experts. Practical implications The proposed hybrid fuzzy-SD approach provides a practical and flexible tool that can be used in various construction projects to assess the cost impacts of construction claims taking into account their complex interactions. Using the proposed method, the accuracy of achieved results is increased compared to conventional methods that are used for the quantification of claims since the complex inter-related structure of influencing factors and the claims interactions are taken into account. One of the capabilities of the proposed hybrid fuzzy-SD method is its flexibility. Depending on the type of contract and the parties involved in the project, the proposed hybrid fuzzy-SD method can be used during different stages of the project life cycle to model and quantify claims. Originality/value The proposed approach may present a flexible and robust method for quantification of construction claims. The novelty aspects of this paper are as follows: the extensively complex structure of claims arising from both internal and external interactions is accounted for using SD. The existing uncertainties affecting the impacts of a claim are taken into account.

Sign in / Sign up

Export Citation Format

Share Document