scholarly journals Social and financial performance of MFIs: complementary or compromise?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nitin Navin ◽  
Pankaj Sinha
Keyword(s):  
Financial Performance ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Current Time ◽  
Content Type ◽  
Dynamic Framework ◽  
The Social ◽  
Loan Size ◽  
The Relationship ◽  
Practical Implications

Purpose With the ongoing transformation of the microfinance sector, questions have been raised on the ability of microfinance institutions (MFIs) to perform financially well without compromising with their social objectives. The current study attempts to analyse the social and financial performance of Indian MFIs with an objective to find the kind of relationship between these two objectives. Design/methodology/approach The dynamic framework of simultaneous equations model is used to find the nature of the relationship which exists between social and financial performance of Indian MFIs. Findings The study finds that depth of outreach enables MFIs to achieve financial sustainability. On the other hand, financially strong MFI lend more as reflected by an increase in their average loan size. Research limitations/implications Many MFIs still receive subsidies to support their operations. Ideally, adjustments should be made to remove the effect of such subsidies on their cost. However, due to non-availability of data, the study fails to make any adjustment for the subsidies. Practical implications The presence of a complementary relationship between social and financial performance in the Indian microfinance sector is quite encouraging for the policymakers during the current time when the sector is becoming less dependent on subsidies. However, the recent upsurge in the average loan size requires attention. Social implications The findings suggest that MFIs can achieve financial sustainability while targeting poor clients. This indicates that MFIs can perform socially good along with their financial performance. Originality/value Such study is vital when the Indian microfinance sector is moving away from subsidies to become self-reliant and commercialised. Few studies have focused on this aspect of Indian microfinance sector.

scholarly journals The digital transformation of microfinance institutions: an empirical analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gregor Dorfleitner ◽  
Davide Forcella ◽  
Quynh Anh Nguyen
Keyword(s):  
Home Country ◽  
Social Performance ◽  
Digital Transformation ◽  
Financial Inclusion ◽  
Microfinance Institutions ◽  
Content Type ◽  
Future Studies ◽  
The Social ◽  
The Relationship ◽  
Practical Implications

PurposeThis study seeks to identify the factors that are associated with the digital transformation of microfinance institutions (MFIs).Design/methodology/approachThe study employs probit models to investigate the likelihood of integrating digital solutions by MFIs and Heckman models for robustness checks.FindingsThe findings reveal that the adoption of these tools is consistent with the social performance of MFIs. Furthermore, the profitability of the institutions and their home country development are associated with a larger application of digital support solutions.Research limitations/implicationsSince the survey data collected is not longitudinal and does not cover many MFIs, it may encounter the absence of comprehensive results. Moreover, the study is limited to supply-side incentive factors, thus lacks of investigations under supply-demand interaction schemes. Therefore, future studies are encouraged to fill up these knowledge gaps.Practical implicationsThe results imply that the adoption of digital solutions does not necessarily harm the social performance of MFIs. In addition, the findings may imply that financial sustainability can serve as being a preliminary condition but must not lead to the mission drift of MFIs. Findings of the study have implications for policymakers, donors and investors who wish to accelerate the digital transformation within the microfinance industry and to significantly boost financial inclusion. A focus on more social-oriented MFIs can be an appropriate solution. Furthermore, the pathway to digital financial inclusion through microfinance can be made more efficient if improved and supportive facilities as well as systems for digital technology are available.Originality/valueThis paper is the first one which highlights the relationship between the MFI's social performance and the application of digital solutions by MFIs. Furthermore, we discuss this link while considering cost aspects.

HC and financial performance with two HRM strategies

2017 ◽  
Vol 66 (4) ◽  
pp. 459-478 ◽  
Author(s):  
Nopadol Rompho
Keyword(s):  
Human Capital ◽  
Regression Analysis ◽  
Financial Performance ◽  
Lead Time ◽  
Design Methodology ◽  
Strategy Choice ◽  
Content Type ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to examine the relationship between levels of human capital and financial performance of firms that use two distinct human resource management (HRM) strategies. Design/methodology/approach A survey of 128 HRM managers was conducted to assess differences in human capital between firms using different HRM strategies. A multiple regression analysis was used to investigate the relationship between firms’ human capital and financial performance. Findings The results show that companies employing a make-organic strategy have a higher level of human capital than companies employing a buy-bureaucratic strategy. There was no relationship between the level of human capital and long term financial performance of firms with both make-organic and buy-bureaucratic strategies. Research limitations/implications This research contributes toward understanding the effect of HRM strategy and facilitates an optimal strategy choice depending on the organization. However, this study did not consider the lead time between changes in human capital and the effect on financial performance. Practical implications The research encourages firm managers to understand the value of human capital, preparing them for changes in the future. Originality/value This study is among the first to investigate the relationship between human capital and financial performance considering different HRM strategies.

Financial disclosure and performance of microfinance institutions

2014 ◽  
Vol 10 (3) ◽  
pp. 314-337 ◽  
Author(s):  
Shakil Quayes ◽  
Tanweer Hasan
Keyword(s):  
Financial Performance ◽  
Least Squares ◽  
Least Squares Method ◽  
Financial Disclosure ◽  
Microfinance Institutions ◽  
Content Type ◽  
Three Stage Least Squares ◽  
And Performance ◽  
The Impact ◽  
The Relationship

Purpose – The purpose of this paper is to analyze the relationship between financial disclosure and the financial performance of microfinance institutions (MFIs). Design/methodology/approach – The paper utilizes ordinary least squares method to analyze the impact of disclosure on financial performance, an ordered probit model to investigate the possible effect of financial performance on disclosure and utilizes a three-stage least squares method to delineate the endogenous relationship between disclosure and financial performance of MFIs. Findings – The paper finds that better disclosure has a statistically significant positive impact on operational performance of MFIs; second, it also shows that improved financial performance results in better financial disclosure. Keeping the endogenous nature of the relationship between disclosure and performance, the paper uses a three-stage least squares method to show that disclosure and financial performance positively affect each other simultaneously. Research limitations/implications – The paper attempts to delineate a positive association between better disclosure on financial performance of MFIs, which can be used for developing a better disclosure policy by management, formulating more effective guidelines for disclosure by the stakeholders and mandating more appropriate laws and uniform disclosure practice by regulators. Originality/value – This is the first study that uses a large number of MFIs from 75 countries; second, it uses a uniform scale of designating a disclosure rating (assigned by MIX Market) to show the relationship between disclosure and performance. Finally, it uses three-stage least squares method to address the possible endogeneity between disclosure and performance.

Sustainability and financial performance relationship: international evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ilker Yilmaz
Keyword(s):  
Financial Performance ◽  
Emerging Economies ◽  
Corporate Sustainability ◽  
Joint Effect ◽  
Business Practices ◽  
Content Type ◽  
Firm Financial Performance ◽  
International Evidence ◽  
The Relationship ◽  
Practical Implications

PurposeThe purpose of the article is to examine the relationship of corporate sustainability to firm financial performance by presenting international data.Design/methodology/approachThe sample includes non-financial companies from five emerging economies known as BRICS for a five-year period of 2014–2018. The study uses the ESG (environmental, social, governance) scores from Sustainalytics database and financial data from company reports. Panel regression models are developed to figure out the relationship.FindingsThe results of the article revealed that there is a positively significant relationship between sustainability performance and financial performance. Total ESG score has produced significant results while the individual scores of environmental, social, and governance have produced insignificant results; implying that the components of total ESG score have a joint effect on the financial performance.Practical implicationsThe results of the article have important practical implications for companies. Engagement in sustainable business practices will help improve the financial performance. In addition, the companies should be active in all components of sustainability.Originality/valueThe article contributed empirical evidence for sustainability-financial performance relationship by using the international evidence from five emerging economies.

Harmony-oriented retail innovations and financial performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mónika Anetta Alt ◽  
Zombor Berezvai ◽  
Irma Agárdi
Keyword(s):  
Financial Performance ◽  
Sales Growth ◽  
Asian Countries ◽  
Human Relationships ◽  
Content Type ◽  
Research Findings ◽  
The Relationship ◽  
Positive Effect ◽  
Practical Implications ◽  
Innovation Outcomes

PurposeRecently, a growing need for harmony has been observed worldwide. Harmony is a universal value in both Western and Asian countries. This paper aims to study how the concept of harmony is reflected in the innovation of European multinational grocery retailers and how harmony-related innovations affect the financial performance of the retailers.Design/methodology/approachThe research is based on a multisource database including innovation outcomes and financial performance indicators of 17 European multinational grocery retailers in the period of 2011–2018. In sum, 1,399 innovations were identified by content analysis. The relationship between innovation outcomes and financial performance was measured by panel regression analysis.FindingsResults indicate that retailers differ in launching harmony-oriented innovations. Moreover, 40% more innovations are related to harmony with people as those related to harmony with nature. Finally, harmony-with-people innovations have a significantly positive effect on retailers' sales growth.Practical implicationsBased on the research findings, retailers can improve their sales growth by launching innovations that focus on harmony in human relationships.Originality/valueThis paper extended the concept of harmony to the field of innovations. First, the research showed how the value of harmony appears in the innovations of multinational retailers. Second, the study differentiated between harmony-with-people and harmony-with-nature innovations. Third, the findings revealed that harmony-oriented innovations contribute to retailers' financial performance.

Whether Shari’ah compliance efficiency is a matter for the financial performance

2018 ◽  
Vol 9 (2) ◽  
pp. 183-200 ◽  
Author(s):  
Md. Hafij Ullah ◽  
Ruma Khanam
Keyword(s):  
Financial Performance ◽  
Qualitative Method ◽  
Islamic Banks ◽  
Content Type ◽  
Financial Outcomes ◽  
Leading Position ◽  
Regulatory Bodies ◽  
The Relationship ◽  
E Mail ◽  
Practical Implications

Purpose Shari’ah is the foundation of Islamic banks. Although all the Islamic banks required complying with the Shari’ah requirements fully, the level of compliance differs among the Islamic banks. At the same time, Islamic banks have been performing well, but all do not demonstrate similar financial performance. This paper aims to explore whether Shari’ah compliance efficiency makes any difference in financial performance of Islami Bank Bangladesh Limited (IBBL). Design/methodology/approach This study used IBBL as a case. For exploring the issue of study, this paper applied an e-mail interview approach and interviewed 24 interviewees including financial analysts, IBBL clients and executives of regulatory bodies, the IBBL and other Islamic- and interest-based traditional banks. Interview opinions are then analyzed and interpreted for a deeper understanding of the topic. Findings The study observed that some other factors influence the financial performance of IBBL, but Shari’ah compliance is the dominant instinct of acquiring the leading position. Superior Shari’ah compliance creates internal strengths and external opportunities that facilitate IBBL in achieving higher financial performance. Most interviewees argued that Shari’ah is the only disposition that makes IBBL unique. Moreover, the bank that considerably follows Shari’ah gets better financial outcomes. Research limitations/implications The study used a qualitative method using interview responses only for evaluating the relationship between Shari’ah compliance and financial performance. Further study may be conducted based on a quantitative approach. Practical implications This paper expects to uphold the significance of Shari’ah in improving the financial performance of IBBL and simultaneously motivating the parties associated with the Islamic banks in enhancing the level of Shari’ah compliance. Moreover, this study provides new insights into the importance Islamic banks and their performance in relation to the choice of customers. Originality/value This study explores the significance of Shari’ah compliance in creating avenues for greater financial performance and develops a model showing the ways how Shari’ah compliance leads Islamic banks to achieve higher financial positions.

scholarly journals Does bank regulation and supervision impedes the efficiency of microfinance institutions to eradicate poverty? Evidence from ASEAN-5 countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nurazilah Zainal ◽  
Annuar Md Nassir ◽  
Fakarudin Kamarudin ◽  
Siong Hook Law
Keyword(s):  
Poverty Reduction ◽  
Bank Regulation ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Financial Efficiency ◽  
Content Type ◽  
Regulation And Supervision ◽  
The Social ◽  
Bank Regulation And Supervision

Purpose The purpose of this study is to examine how banking regulation and supervision affect the performance of microfinance institutions (MFIs). It proposes performance of the MFIs from the aspect of social and financial efficiency because the MFIs nowadays not only view to sustain the social role of poverty eradication but in the same time they must strive the financial sustainability to maintain the operation in long run. This study also includes the macroeconomic condition and firm level variables to control for social and financial efficiency of the MFIs. Design/methodology/approach The data consists 168 MFIs from five countries in Southeast Asia from year 2011 to 2017. First stage of analysis is to identify level of social and financial efficiency by using data envelopment analysis approach. Second stage is to examine impact of bank regulation and supervision to the social and financial efficiency by applying panel regression analysis and generalized method of moments for robust estimation methods. Findings The finding shows the MFIs own lower social efficiency and higher score in financial efficiency. This indicates in pursuing financial sustainability, the MFIs in Southeast Asia countries have lost sight of their original mission of poverty reduction. Furthermore, the result also presents a significant impact of bank regulation and supervision to the social and financial efficiency of the MFIs. However, the results appear in different direction when more negative effect is associated with social efficiency. This specifies that bank regulation and supervision are not appropriate to accommodate the social needs, thus hampering the effort of poverty reduction by the MFIs. Research limitations/implications The present study only concentrates on the impact bank regulation and supervision to the performance of the MFIs. As the operation of the MFIs currently has been largely exposed in banking operation, it is suggested that future studies to look for other special issues such as country governance that might influence specifically in social and financial aspect of the MFIs. Practical implications The empirical findings from this study could be useful and may have significant implications for the regulators. The regulators or policymakers could establish the new regulation framework that fulfil the dual needs (social and financial) of the MFIs. Furthermore, the empirical findings also could serve as guidance to regulators and decision-makers in designing new policies for a sustainable and competitive sector of the MFIs. Although the MFIs recently brings a similar role as commercial banks, they need to retain the social aspects as that is the original mission of the MFIs Originality/value The present study proves that the bank regulation and supervision have brought a significant influence to the performance of the MFIs in ASEAN 5 countries.

The impact of entertainment and social interaction with salespeople on mall shopper satisfaction

2019 ◽  
Vol 47 (2) ◽  
pp. 94-110 ◽  
Author(s):  
Maher Georges Elmashhara ◽  
Ana Maria Soares
Keyword(s):  
Social Interaction ◽  
Emotional States ◽  
Content Type ◽  
Mediating Role ◽  
Proposed Model ◽  
The Social ◽  
Shopping Experience ◽  
The Impact ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to understand the role played by emotional states in the relationship between entertainment and social interaction with salespeople and shopper satisfaction. Design/methodology/approach The proposed model was tested using a survey-based study, with a sample size of 318 mall shoppers. Findings The results indicate that pleasure and dominance are mediators in the relationship between entertainment and social interaction with salespeople and mall shopper satisfaction. Moreover, regarding the direct relations, entertainment directly influences satisfaction, while social interaction does not. Practical implications The results have practical implications for mall managers and mall developers. Specifically, entertainment can be used to attract shoppers and to enhance their satisfaction with the overall shopping experience. Practical suggestions to this end are offered. Originality/value This study’s contribution is twofold: first, this study adds to research by addressing the gap in research regarding shopper emotional states. Specifically, it addresses the mediating role played by emotional states of shoppers on the impact of entertainment and social interaction in satisfaction. Second, the study concentrates on the role of salespeople by focusing on the social aspects of the interaction.

Modified integrated Islamic CSRD index and financial performance of Malaysian Islamic banks

2020 ◽  
Vol 11 (8) ◽  
pp. 1599-1617
Author(s):  
Fatimah Noor Rashidah Mohd Sofian ◽  
Rusnah Muhamad
Keyword(s):  
Financial Performance ◽  
Stakeholder Theory ◽  
Partial Least Square ◽  
Least Square ◽  
Islamic Banks ◽  
Content Type ◽  
Partial Least Square Analysis ◽  
The Relationship ◽  
Purposive Sample ◽  
Practical Implications

Purpose The purpose of this paper is to examine the relationship between the modified integrated Islamic CSRD index (MIICSRDi) and financial performance of Malaysian Islamic banks as perceived by the stakeholders. Design/methodology/approach This paper used survey questionnaire with a purposive sample of 343 stakeholders of Malaysian Islamic banks. A theoretical framework was developed and tested by using partial least square analysis. Findings The findings reveal that there is a significant positive relationship between the MIICSRDi and financial performance as perceived by the stakeholders. Research limitations/implications There is a lack of empirical research proposing an Islamic CSRD framework that is suitable to be applied within the context of the Malaysian environment. Hence, this paper shows that MIICSRDi in line with the stakeholder theory, Shariah principles and ‘urf principle (customary practice) can be used by Malaysian Islamic banks to increase their performance. Practical implications MIICSRDi can be used as one of the strategies to improve the financial performance of Islamic banks. In fact, it can be instilled in the value-based intermediation introduced by Bank Negara Malaysia for the rebranding of Islamic banks. Originality/value The relationship between perceived MIICSRDi and perceived financial performance is explained in light of the stakeholder theory, Shariah principles (unity, equilibrium, free will, responsibility and tazkiyah) and ‘urf principle (customary practice).

Corporate social responsibility practice and corporate financial performance: evidence from Nigeria companies

2015 ◽  
Vol 11 (4) ◽  
pp. 749-763 ◽  
Author(s):  
Aliyu Baba Usman ◽  
Noor Afza Binti Amran
Keyword(s):  
Regression Analysis ◽  
Corporate Social Responsibility ◽  
Financial Performance ◽  
Financial Data ◽  
Annual Reports ◽  
Corporate Financial Performance ◽  
Content Type ◽  
Corporate Social ◽  
The Relationship ◽  
Practical Implications

Purpose – The purpose of this paper is to describe the nature and trend of corporate social responsibility (CSR) practices in Nigeria. The second objective of this paper is to examine the relationship between the dimensions of CSR disclosures and corporate financial performance (CFP) among Nigerian listed companies. Design/methodology/approach – To carry out this research, content analysis was conducted to extract CSR and financial data from annual reports of 68 companies listed on the Nigeria Stock Exchange. Financial data were cross-referenced with the NSE Factbook. CSR indexes and financial performance measures were computed for estimation of the regression analysis equation. The percentages were used to describe the nature and trend of CSR practice in Nigeria. This was followed by the hierarchical multiple regression analysis to examine the relationship between CSR and CFP. Findings – The results of the descriptive statistics show that the listed companies used CSR initiatives to communicate social performance to their stakeholders. From the regression analysis, community involvement disclosure, products and customer disclosures and human resource disclosures were found to enhance CFP. The results also reveal a negative relationship between environmental disclosure and CFP, which indicates that disclosure of environmental impact information could be value destroying in Nigeria. Research limitations/implications – The major limitation of this paper is the sample size. Also, failure of corporations to disclose CSR in the annual reports will have a material effect on these findings. Practical implications – The findings of this paper have practical implications on the management of Nigerian companies to re-think and re-strategize their CSR policies that incorporate social and economic performance to improve their CFP. Social implications – This paper has implication on stakeholders in validating the corporate citizenship of corporations based on the level of commitment and participation in CSR initiatives. Also, findings of this paper will alert the enforcement agencies on the status of CSR practices in Nigeria. Government in collaboration with private and public agencies should consider the needs for CSR framework and database to guide social and environmental reporting in the country. Originality/value – The paper has examined the relationship between CSR and CFP based on CSR dimensional approach. Aspect of human resource and products/customers CSR has been neglected in the context of Nigerian CSR research. This paper makes valuable contribution by offering new and fresh insight on these dimensions.

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