scholarly journals Profiting from Poverty? A Case Study of UK based Microfinance Institutions

2015 ◽  
Vol 2 (2) ◽  
Author(s):  
Nitin Navin
Keyword(s):  
Developing Countries ◽  
Financial Performance ◽  
Financial Services ◽  
Social Performance ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Trade Off ◽  
External Capital

The success of the microfinance movement is beyond doubt. However, as the scope of the sector increased and commercialised, some problems of it became evident. Issue of profitability and sustainability of Microfinance institutions (MFIs) and, use of external capital by them are the two most debatable issues of the microfinance sector. The current study investigates these issues by targeting MFIs and consultants of microfinance sector located in UK. These MFIs and consultants have operations in different poor and developing countries. The study found that believing that MFIs can alone eliminate poverty is a fallacy. Any such belief by the policymakers will make further delay in eradicating poverty. The study also found that financial sustainability of microfinance seems to remain unachievable for most of the MFIs and, that there are fair chances of having trade-off between financial performance and social performance for those MFIs. On this line of thought, the study concludes by arguing that microfinance cannot be treated only as a substitute of the traditional financial services.

Islamic and Conventional Micro-Financing in the MENA Region

2020 ◽  
pp. 216-239
Author(s):  
Imene Berguiga ◽  
Yosra Ben Said ◽  
Philippe Adair
Keyword(s):  
Middle East ◽  
Financial Performance ◽  
North Africa ◽  
Financial Services ◽  
Social Performance ◽  
Microfinance Institutions ◽  
Mena Region ◽  
Trade Off ◽  
The Social ◽  
Conventional Services

The performance of MicroFinance Institutions (MFIs) is analysed for the period 2004-2015. Sample consists of 67 MFIs in the Middle East and North Africa region. It includes a subsample of 18 Islamic MFIs (IMFIs), whereof Solebusiness grants exclusively Islamic financial services and Window provides both Islamic and conventional services. A model of simultaneous equations with interacting variables tests seven hypotheses addressing financial performance, social performance, and the social and financial performance relationship. Conventional MFIs (CMFIs) experience higher financial performance than IMFIs and Window experiences higher financial performance than Solebusiness; IMFIs do not experience higher social performance than CMFIs; whether conventional or Islamic, MFIs face a financial vs. social performance trade-off.

scholarly journals The Impact of Information Communication and Technology Utilization on the Financial Performance of Microfinance Institutions in Rwanda Case Study: Reseau Interdiocesain De Microfinance (Rim) Ltd, Rwanda (2011 -2015)

2017 ◽  
Vol 4 (2) ◽  
pp. 13
Author(s):  
Jean Bosco Harelimana
Keyword(s):  
Financial Performance ◽  
Quantitative Methods ◽  
Positive Impact ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Information Communication ◽  
Qualitative And Quantitative Methods ◽  
Descriptive Survey ◽  
The Impact

The study analyzed the impact of ICT utilization on the financial performance of microfinance institutions inRwanda with case study of Réseau Interdiocesain de microfinance (RIM) Ltd undertaken within 5 years (2011-2015). The study adopted the use of descriptive survey using both qualitative and quantitative methods for a totalsample size of 132. Purporsive and simple random simpling was used for this purpose. Primary and Secondary datawere collected and thene analyzed using SPSS version 16.00. The study found that ICT has been introduced and usedabout 5 years and above. The study found that ICT impact firstly on financial sustainability and profitability (65.8%),secondly on financial efficiency and productivity (23.7) and finally on portfolio quality (5.3%). ICT utilization havea high influence to the RIM Ltd.’s financial performance compared to the previous situation.The correlation results imply that ICT usage has a positive impact on financial sustainability and profitability as theymove in the same direction (R=0.502). The strength of the impact was found to be low due to the low investments inICT among microfinance institutions.

scholarly journals Unearthing the Double Bottom Line Commitments of Indian Microfinance Institutions

2017 ◽  
Vol 9 (1) ◽  
pp. 14
Author(s):  
Prasenjit Roy
Keyword(s):  
Social Development ◽  
Financial Performance ◽  
Social Performance ◽  
Microfinance Institutions ◽  
Bottom Line ◽  
Trade Off ◽  
Success Stories ◽  
Small Domain

The microfinance industry has emerged from a small domain institution to a broad tool for social development, as many success stories reveal its true potential for serving the society. Nonetheless, like every institution, it has to be sustainable in carrying out its developmental activities. This is where the idea of double bottom line surfaces where a win-win situation is attained for the microfinance institutions along with the clients to whom they are serving. Although there are other unprincipled grounds associated with the concept which obstruct this thought and deviates the MFI activities in accomplishing better and higher revenues. This leads to a trade-off. The paper tries to explore the presence the double bottom line in the MFIs of India. Further, to find if there is a trade-off between financial performance and social performance. A dataset comprising all the Indian MFIs reported in www.mixmarket.org for the period from 2009 to 2013 has been used for the study. The analysis is carried on various indicators that resemble the performance and efficiency of the MFIs. The evidence suggests a moderate trade-off in the operations of the Indian MFIs although largely they adhere to the double bottom line. They are mainly guided by outreach scale in terms of a number of borrowers.

scholarly journals Microfinance Complementarity and Trade-Off between Financial Performance and Social Impact

2015 ◽  
Vol 7 (11) ◽  
pp. 128 ◽  
Author(s):  
Trong V. Ngo
Keyword(s):  
Financial Performance ◽  
Financial Services ◽  
Poverty Reduction ◽  
Social Impact ◽  
Economies Of Scale ◽  
Generalized Method Of Moments ◽  
Microfinance Institutions ◽  
Trade Off ◽  
The Poor ◽  
Trade Offs

There is a widespread belief that providing access to financial services (microfinance) or reaching the poor with microcredit are perfect solutions to establish a sustainable economy or to help kick-start a bottom-up recovery and social development animated by the poor themselves through self-employment and microenterprises. Microfinance has therefore become an important instrument for poverty alleviation and for improving the welfare of the poor in both developing and transition economies. Due to the difficulty of targeting the poor, who have a lack of collateral, microfinance institutions (MFIs) are called on to achieve a balance between social impact (poverty reduction) and positive financial performance. This paper assumes that the financial objectives of MFIs operate in opposition to each other and that a trade-off is inevitable. Unbalanced panel data of MFIs for the period 1995-2013 has been extracted from the MIX Market website. In order to solve the endogeneity problem, this paper employed the dynamic system GMM (generalized method of moments) of Blundell and Bond (1998) that is considered as the new methodology currently in use in the empirical investigation of the financial performance in banking and finance. This paper outlines some of the parameters that affect the nature of trade-offs and complementarities between social and financial objectives in microfinance performance, and provides empirical evidence from cross-country analysis. Sustainability has a positive link with outreach. MFIs tend to expand their outreach in order to achieve sustainability, based on the advantages of the economies of scale. However, a threshold which makes the trade-offs or complementarities between financial and social objectives reverse if it goes beyond a certain point is also observed.

scholarly journals Securitization: An Alternative Funding Mechanism for the Microfinance Institutions

2018 ◽  
Vol 3 (2) ◽  
pp. 1
Author(s):  
Shahadat Hossain ◽  
Rubaiyet Hasan Khan
Keyword(s):  
Developing Countries ◽  
Financial Services ◽  
Poor People ◽  
Microfinance Institutions ◽  
Cross Border ◽  
Alternative Funding ◽  
Funding Mechanism ◽  
The Poor

Despite microfinance has been widely appreciated as an informal financial mechanism to provide financial services to the poor people in developing countries, this sector is still lacking behind in fulfilling the demand gap due to the dearth of adequate funds. Securitization opens a new horizon that overcomes the funding barriers of microfinance through which the top tier Microfinance Institutions (MFIs) can accumulate funds to enlarge their portfolio without issuing any debt or equity. This paper is a desk study that synthesizes how securitization can be used in the funding of the MFI portfolio and what are the benefits and risks associated with securitization of microfinance portfolio. As a case study, we use the two examples of cross-border securitizations in the microfinance industry to diagnose the role of securitization in microfinance.

The Role of Mobile Money in Moderating Financial Exclusion: A Tanzanian Experience

2020 ◽  
Vol 2 ◽  
pp. 1-24 ◽  
Author(s):  
Deogratius Joseph Mhella
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Banking Sector ◽  
Research Question ◽  
Microfinance Institutions ◽  
Mobile Money ◽  
Access To Credit ◽  
Financial Exclusion

Prior to the advent of mobile money, the banking sector in most of the developing countries excluded certain segments of the population. The excluded populations were deemed as a risk to the banking sector. The banking sector did not work with cash stripped and the financially disenfranchised people. Financial exclusion persisted to incredibly higher levels. Those excluded did not have: bank accounts, savings in financial institutions, access to credit, loan and insurance services. The advent of mobile money moderated the very factors of financial exclusion that the banks failed to resolve. This paper explains how mobile money moderates the factors of financial exclusion that the banks and microfinance institutions have always failed to moderate. The paper seeks to answer the following research question: 'How has mobile money moderated the factors of financial exclusion that other financial institutions failed to resolve between 1960 and 2008? Tanzania has been chosen as a case study to show how mobile has succeeded in moderating financial exclusion in the period after 2008.

Trade-off between financial sustainability and outreach of microfinance institutions

2015 ◽  
Vol 5 (2) ◽  
pp. 231-250 ◽  
Author(s):  
Mira Nurmakhanova ◽  
Gavin Kretzschmar ◽  
Hassouna Fedhila
Keyword(s):  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Trade Off

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.

Sign in / Sign up

Export Citation Format

Share Document