scholarly journals Alleviating Poverty through Islamic Microfinance: Outreach and Efficiency (Study on BMT and Islamic Cooperatives in Indonesia)

2020 ◽  
Vol 16 ◽  
pp. 1362-1376
Author(s):  
Purwanto Purwanto ◽  
Ina Primiana ◽  
Dian Masyita ◽  
Erie Febrian
Keyword(s):  
Coefficient Of Determination ◽  
Data Envelopment ◽  
Strong Positive Correlation ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Qualitative Approaches ◽  
The Social ◽  
Dependent Variables ◽  
Islamic Microfinance ◽  
The Impact

The involvement of Islamic Microfinance Institutions (IMFI) in building the national economy is paramount to help the poor. However, provision of access and services to lower-level households can potentially conflict with the sustainability of the institutions. This study analyses the social outreach factors that determine financial and social efficiencies. To reach the set goal and solve this issue, we used mixed methodology combining quantitative (statistical instruments, such as Data Envelopment Analysis (DEA) and multivariate analysis) and qualitative approaches (interviews to clarify or deepen the existing information). The assessment of the dependent variables is influenced by proxies of depth, breadth, length, scope, and cost. The results showed that the average loan instalments and the number of offices and branches significantly influence financial and social efficiency. The age of the institution only has an effect on financial efficiency. Simultaneously, profit orientation, the amount and type of financing and the amount and type of savings only have a high impact on social efficiency, whereas the impact of fund collection and cost per borrower is insignificant. There is a strong positive correlation between the two dependent variables. The influence of independent variables on financial and social efficiency is significant with the coefficient of determination 23.1274 % and 53.2941 %, respectively.

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.

scholarly journals Unboxing the black box on the dimensions of social globalisation and the efficiency of microfinance institutions in Asia

2021 ◽  
Vol 12 (3) ◽  
pp. 557-592
Author(s):  
Hafezali Iqbal Hussain ◽  
Katarzyna Szczepańska-Woszczyna ◽  
Fakarudin Kamarudin ◽  
Nazratul Aina Mohamad Anwar ◽  
Mohd Haizam Mohd Saudi
Keyword(s):  
Value Added ◽  
Least Square ◽  
Data Envelopment ◽  
Microfinance Institutions ◽  
Social Efficiency ◽  
Data Set ◽  
Positive Correlation ◽  
The Social ◽  
Potential Factors ◽  
Scientific Practical

Research background: Microfinance institutions (MFIs) play an important role in alleviating poverty. Thus, MFIs should be efficient in order to ensure that their objectives on social welfare and financial performance can be achieved by identifying the potential determinants, specifically on social globalisation. Purpose of the article: This paper examines the impacts of the social globalisation dimensions of interpersonal, informational, and cultural globalisations on the financial and social efficiency of MFIs. Methods: The data period covered the years 2011?2018; the data set consists of 176 MFIs from six Asian countries. The Data Envelopment Analysis (DEA) approach was employed to examine the MFIs? efficiency levels. Generalised Least Square (GLS) regressions were used to analyse the impacts of social globalisation and other determinants towards the efficiency of MFIs. Findings and value added: Interpersonal globalisation had a significantly negative correlation with social efficiency, suggesting that increasing the number of foreigners in management intrudes on local managers? decisions. Informational globalisation had a significantly positive correlation with financial and social efficiency, which signifies that more information produces monopolistic profits in this industry. Finally, cultural globalisation had a positive correlation with social efficiency, demonstrating that a global trading culture improves the abilities and technological skills for labour development and enhances MFIs? social efficiency. In general, the Cobb Douglas Production theory explained the understanding of the impacts social globalisation has on MFI efficiency. Furthermore, the findings from this study could provide important scientific, practical gap and contribute new insights and implications to various parties. Firstly, governments or policymakers can establish effective national policies and strategies. Secondly, this study could support investors in monitoring and understanding the performance of MFIs. Finally, the research could fill scholarly gaps and uncover more potential factors that influence the efficiency of MFIs.

Financial inclusion and the performance of microfinance institutions: Does social performance affect the efficiency of microfinance institutions?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nisha Bharti ◽  
Sushant Malik
Keyword(s):  
Rural Areas ◽  
Social Performance ◽  
Financial Inclusion ◽  
Data Envelopment ◽  
Microfinance Institutions ◽  
Content Type ◽  
Social Mission ◽  
Vision Statements ◽  
The Social ◽  
The Impact

Purpose The purpose of this study is to evaluate whether focus on social output affects the efficiency of MFIs. Inclusive growth is the key developmental aim for many developing countries, including India. The role of microfinance institutions (MFIs) in promoting financial inclusion is widely applauded. However, to achieve financial sustainability, MFIs have become highly commercialised and are seen to have drifted away from their social mission. Various studies have shown the efficiency of MFIs on financial parameters. MFIs being a social enterprise, it is important to include social output among the efficiency parameters. Design/methodology/approach This study attempts to compare the efficiency of MFIs with and without social performances across the various size of MFIs based on their asset, i.e. large, medium and small. This study uses Data Envelopment Analysis (DEA) for assessing an MFI’s efficiency. For calculating the social output score, the Gutman Scale is used. Efficiency is calculated with and without social output, and the resulting scores are compared to assess the impact of social performance on the efficiency of MFIs. Findings The results of this study allow us to conclude that with the inclusion of social output, the efficiency of MFIs improves across various categories. In terms of social performances, it is concluded that MFIs are targeting women and mostly working in rural areas but have neglected issues like health and education. Originality/value The findings of this study will help MFIs in formulating their mission and vision statements and in achieving the objective of financial inclusion without experiencing mission drift.

scholarly journals The social and financial efficiency of microfinance institutions: the case of Bosnia and Herzegovina

2017 ◽  
Vol 12 (2) ◽  
pp. 85-101 ◽  
Author(s):  
Velid Efendic ◽  
Nejra Hadziahmetovic
Keyword(s):  
Bosnia And Herzegovina ◽  
Recovery Period ◽  
Secondary Data ◽  
Data Envelopment ◽  
Microfinance Institutions ◽  
Social Dimensions ◽  
Social Efficiency ◽  
Financial Efficiency ◽  
The Social ◽  
Post War

Abstract This paper investigates the financial and social efficiency of microfinance institutions (“MFIs”) in Bosnia and Herzegovina, as well as the effects of the latest crisis on these “two-dimensional” efficiencies. Specifically, we analyze the efficiency of MFIs in Bosnia and Herzegovina (BiH) as a good case of a European, post-war country in transition with a developed micro-financial sector. The efficiency analysis relies on secondary data collected and investigated through Data Envelopment Analysis (DEA). The study covers data for the period commencing in 2008 and ending in 2015. In our empirical investigation, we find a suboptimal level of both financial and social efficiency among MFIs in BiH. However, financial efficiency is significantly higher than social efficiency, while small-sized MFIs over perform larger ones in both the financial and social dimensions. As a result of the crisis, MFIs recorded a declining trend in efficiency up to 2010, after which they began to show signs of slow recovery. However, our results suggest that MFIs prioritized financial over social goals in recovery period following the crisis.

Impact of Competition on Efficiency of Microfinance Institutions: Cross Country Comparison of India and Bangladesh

2021 ◽  
pp. 097300522110052
Author(s):  
Joyeeta Deb ◽  
Ram Pratap Sinha
Keyword(s):  
Information Exchange ◽  
Data Envelopment ◽  
Bottom Of The Pyramid ◽  
Microfinance Institutions ◽  
Tobit Regression ◽  
Social Efficiency ◽  
Trade Off ◽  
Social Objective ◽  
Efficient Level ◽  
Potential Impact

Increased competition coupled with commercialisation in the Indian microfinance sector has brought about many major transformations. From an impact-driven development programme, microfinance institutions (MFIs) today emerged as commercially oriented profit-making entities. In addition to bringing their commercial and social objectives into balance, MFIs today are striving for efficient level of operation. Efficiency in the level of operation of MFIs allows them to remain competitive and attain financial sustainability. However, it is also imperative for MFIs to remain socially committed towards the ultimate mission of reaching the poorest at the bottom of the pyramid. Hence, it is of research interest to see the trade-off between MFIs’ social objective of spreading outreach and at the same time remaining financially sustainable. Against this backdrop, this article is devoted to study the potential impact of competition and commercialisation on efficiency of MFIs in India and Bangladesh. The study is carried over 75 MFIs altogether over the period of 8 years from 2009 to 2016. The data have been collected from microfinance information exchange database. Efficiency is measured through technical efficiency (TE) scores as estimated under data envelopment analysis. In order to establish the association between competitions, which is estimated by the Herfindahl–Hirschman index (HHI), tobit regression is used. The study evidenced increasing level of competition in the sector over the years, but it is more pronounced in India as against Bangladesh. In order to analyse the trade-off, TE scores are separately estimated under both financial and social measures. TE score is found to be higher in case of social measures of efficiency as against financial efficiency. Further, under both the measures, competition is found to be having a significant impact on both financial and social efficiency.

Cross-Border Funding and Microfinance Mission Drift: Evidence from Sub-Saharan Africa

2016 ◽  
Vol 17 (2) ◽  
pp. 20-40
Author(s):  
Akem Forkusam
Keyword(s):  
Sub Saharan Africa ◽  
Microfinance Institutions ◽  
Public And Private ◽  
Mission Drift ◽  
Cross Border ◽  
The Social ◽  
Sub Saharan ◽  
The Impact ◽  
Different Sources ◽  
Ssa Countries

Sub-Saharan Africa (SSA) has become the top priority for international funders and they are now increasing their cross-border funding to microfinance institutions (MFIs) in the region. This foreign funding is considered an additional source of capital for MFIs in the region who are facing difficulties in meeting the demand of the poor. However, these funds are provided by public and private funders who each have different motives. The paper examines the impact of these different sources of funding on microfinance performance and mission drift in SSA, which is the world’s poorest region. The study utilizes data from 212 MFIs in 30 SSA countries accessed over a three-year period (i.e. 2007, 2009, and 2011). The findings show that cross-border funding does not affect either the social or financial performance of MFIs when time and country effects are accounted for.

Profitability vs Poverty alleviation: has banking logic influences Islamic microfinance institutions?

2019 ◽  
Vol 4 (2) ◽  
pp. 260-279
Author(s):  
Luqyan Tamanni ◽  
Mohd Hairul Azrin Haji Besar
Keyword(s):  
Mission Statements ◽  
Annual Reports ◽  
Microfinance Institutions ◽  
Local Data ◽  
Content Type ◽  
Related Information ◽  
The Poor ◽  
Islamic Microfinance ◽  
The Impact ◽  
Primary Mission

Purpose The purpose of this paper is to shed some lights on the process of mission drifting or abandoning poverty objective by Islamic microfinance institutions (IMFs). The paper investigates whether the extensive use of banking logic changes IMFs, from focusing on both development and financial objectives to only considering sustainability as their primary mission. Design/methodology/approach This paper adopts mixed methods by analyzing 7,200 microfinance data from Microfinance Exchange Market and reviewing annual reports and websites of 25 IMFs to examine their vision and mission statements and other related information. Findings The finding shows Islamic microfinance has not changed, despite increasing adoption of financial or banking performance measures. However, size and age of the institutions may affect the outcome in the future. The authors find that smaller microfinance institutions maintain genuine objective to serve the poor, as the grow larger they would be more inclined toward sustainability objectives. Research limitations/implications The research is limited on the sample size as data on Islamic microfinance globally is limited. However, the paper looked at the global data rather than local data to compensate for this limitation. Future study would be further taking the study through qualitative methods to support the study. Originality/value This paper aims to shed some lights on the process of mission drifting or abandoning poverty objective by IMFIs. The paper investigates how has the extensive use of financing logic has changed IMFIs from focusing on both development and financial objectives to only considering sustainability as their primary mission. Arun and Hulme (2009) argued that the interaction of multiple logic within microfinance institutions, i.e. financial vs social, could pose some serious management dilemmas within microfinance institutions. Further, commercialization puts pressure on the field staffs to achieve financial targets and often neglect their poverty outreach mission to the poor. The well-known crisis in Andhra Pradesh, India where clients of microfinance institutions committed suicide after being shamed by field officers who tried to collect payments of loans (Mader, 2013; Taylor, 2011), provides a powerful case of the impact of financialization to microfinance clients.

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.

scholarly journals Servant Leadership: Antecedent Factors, Impact, and Education Theories Used as Researcher's Perspective

2020 ◽  
Vol 9 (5) ◽  
pp. 60
Author(s):  
Fransiskus Sawan ◽  
Suryadi Suryadi ◽  
Nurhattati Nurhattati
Keyword(s):  
Servant Leadership ◽  
Social Exchange ◽  
Social Exchange Theory ◽  
Organizational Level ◽  
Motivation To Lead ◽  
Individual Level ◽  
The Social ◽  
Dependent Variables ◽  
Research Gap ◽  
The Impact

A comprehensive understanding of the antecedent factors, and the impact of servant leadership and also about the education theories used as a perspective are so essential for leaders and researchers. However, there is not enough information about it. This paper was made to fill this gap by using the literature review approach. It was done to 71 Scopus indexed articles, which were published in the 2015 – 2020. There are several results of the review, those are: (1) servant leadership is influenced by the emotional intelligence, self-efficacy, motivation to serve, non-calculative as one dimension of motivation-to-lead, and mindfulness; (2) servant leadership have an impact on 38 dependent variables in individual level and 16 dependent variables in the organizational level both directly and indirectly; (3) there are 31 theories, which are used as a researcher's perspective, and two between them, which are mostly used are the social exchange theory and social learning theory. The result of this research gives contribution, which enriches the theoretical scope of servant leadership. This academic contribution is for sure will be so beneficial for leaders who commit to developing the best potential owned by their staff for a better organization. The result of this research will also be essential for future researchers because it shows a state of the art and research gap about servant leadership.

scholarly journals The Impact of Social Responsibility Disclosure in Reducing the Risk in Jordanian Commercial Banks

2020 ◽  
Vol 11 (3) ◽  
pp. 142
Author(s):  
Yousef Shahwan ◽  
Oways Abdel-hamid
Keyword(s):  
Social Responsibility ◽  
Stock Prices ◽  
Commercial Banks ◽  
Financial Reports ◽  
The Social ◽  
Dependent Variables ◽  
Simple Regression Analysis ◽  
The Impact ◽  
The Relationship ◽  
Simple Regression

This study investigates the impact of disclosure of social responsibility in reducing risks in Jordanian commercial banks. To realize the goal of this study, the researcher followed the descriptive-analytical method. The data of the study sample was gathered from the financial reports of the listed banks on the Amman Financial Market that pertain to stock prices and market return in the period 2014-2018. The study used simple regression analysis to examine the relationship between independent and dependent variables. Among the most prominent findings of the study, there is an impact of the social responsibility disclosure in reducing risks, as well as an effect of the dimensions of social responsibility: the environment, customers and employees in reducing risks.

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