Impact measurement practices by microfinance funds

Purpose This paper aims to propose cash waqf (endowment) to develop a conceptual model that can be utilised to extend microfinance for refugees. Design/methodology/approach Qualitative method is used in this research. An extensive review of the literature has been conducted. Latest literature on refugees, microfinance has been critically examined beside the current cash waqf models. Findings Empirical studies have shown that many refugees are equipped with marketable skills and talents that can be utilised to improve their socio-economic situations. The proposed model – cash waqf refugee microfinance fund (CWRMF) – is structured to extend microfinance to potential refugee micro entrepreneurs. To address the lack of collateral, which is a requirement to gain any microfinance, CWRMF has been incorporated with a takaful unit (cooperation) by which refugees may guarantee each other. Additionally, the model has also been structured to address the challenge of sustainability of the institution that would provide microfinance. Hence, a reserve fund has also been integrated into the model. Practical implications CWRMF represents a potential model to be implemented by humanitarian non-governmental organisations (NGOs) and aid agencies to support livelihood of refugees in particular for Muslim refugees. Positive outcome is expected from the implementation of this model. This is because of the various advantages of microfinance programs not only on refugees but also on concerned NGOs, host populations and donor parties. Additionally, this paper is a set of primarily thoughts aims to open the door wider for more researchers to explore the potential of cash waqf as one of the instruments to finance refugee microenterprises and business activities. Originality/value Recently cash waqf has been into several models for socio-economic development and poverty alleviation. This paper is proposing cash waqf as a source for a microfinance fund that can contribute in the improvement of socio-economic situations of millions of refugees around the world.

Suitability of Microfinance as an Investment Option

© 2014 Vilnius Gediminas Technical University (VGTU) Press. This article is concerned with contribution of microfinance investment funds to a sustainable financial portfolio. With regard to the dependence of microfinance funds’ returns on the performance of stock and fixed income markets in developed and emerging economies we find slightly negative correlation when measured by the portfolio beta measure. Our regression analysis confirms that returns on investment in microfinance investment funds exceed the returns on the market portfolio. This result together with reported near-to-zero beta estimates as a proxy for the systematic risk may be taken to be a clear financial advantage of an inclusion of microfinance assets in a portfolio compared to pure stock or bond portfolios. The results based on CAPM beta and Jensen’s alpha are confirmed by mean-variance spanning test. We show that the socially responsible investors may invest into microfinance without sacrifice with respect to pure financial indicators.

Like other developing countries, microcredit in Vietnam has been recognized as an important credit source of the poor, who need capital but are normally by-passed by commercial banks. However, the provision of credit to the poor is challenged by the existing tradeoff between depth of outreach and financial sustainability. In this study, Principal Component Analysis and Propensity Score Matching were used to assess whether microcredit reaches the poor and its role in poverty reduction. The Microfinance Fund and Community Development (MFCD), a microfinance institution in Northern Vietnam was selected as a case study. The research has shown that microcredit successfully reaches the poor households as 67% of credit recipients belong to the last three bottom groups. The observed poverty targeting is consistent with the mission of the microfinance institution. In addition, the provision of microcredit has positive but statistically insignificant impact on household income and expenditure. This study suggests that unless access to additional resources should be made available to the poor, a small amount of credit alone could be insufficient to reduce poverty.

Purpose – These last three years, the global reputation of microfinance has been damaged by some major crises, notably in India. The Microfinance Investment Vehicles (MIVs), funded by public money and socially inclined investors, are believed by observers to be part of the causes of the crises (von Stauffenberg & Rozas, 2011). As a consequence, they now have to demonstrate their commitment to the social mission of microfinance. This chapter aims at putting forward the debate on MIVs’ ability to effectively contribute to the social mission of microfinance by analyzing how they integrate social performance in their investment decisions. Methodology/approach – Analysis of interviews with microfinance fund managers based on a framework of recognized impediments to a socially responsible approach in investing. Findings – While social performance is recognized by respondents to be an important topic for the industry, fund managers still do not give a strong role to social criteria in investment decisions. The findings of the qualitative analysis in the chapter demonstrate that this is linked to a number of major impediments such as the tendency to believe that microfinance is social per se, the lack of standardization in social performance tools, and also a loose regulation regarding social reporting. Research limitations/implications – The findings of the study are limited due to the relatively small sample size and the focus on fund managers’ answers only. Future research could investigate the viewpoints of different stakeholders in the investment process, such as the back investors of microfinance funds or the regulatory institutions. Originality/value – To the best of our knowledge, this is the first attempt to get insights on the impediments to a stronger focus on social performance by MIVs, with the application of a recognized framework from the Socially Responsible Investment (SRI) literature.

Africa - EIB: Microfinance Fund

Famine, Finance, and Adjustment to Environmental Shock: Microcredit and the Great Famine in Ireland

Microfinance funding is widely regarded as an effective method for reducing poverty and empowering women. The effects of microfinance from India on the empowerment of women were examined in this study. To limit the potential impact of immaterial factors, a comprehensive array of primary and secondary data, along with propensity score matching, was collected. The research results indicated that microfinance significantly increased monthly household earnings and enhanced asset characteristics. Although female entrepreneurship and revenue production were facilitated by microfinance, no impact was observed on women's family choices or mobility in accordance with the hierarchical structure of family income and spending across various Indian states. The findings from this research have contributed to the body of knowledge in three distinct ways, both technically and experimentally. The present research provides new insights into the theory of empowerment by demonstrating how various aspects of women's economic and social advancement are influenced by the availability of microfinance. Finally, societal and cultural norms were found to have a significant effect on female characteristics and lifestyles, illustrating how community and familial customs impacted the effects of microcredit on women's empowerment and vice versa.

Co-Creation for Impact Investment in Microfinance

The third in the MIF Retrospectives series, this paper takes a look at how microfinance has grown in Latin America and the Caribbean, as well as MIF¿s pivotal role in strengthening microfinance institutions and promoting investment in microfinance funds.

Some faith-based NGOs (FBOs) encourage their constituencies to consider pro-social investments, conscious consumption patterns, long-term volunteering, and other potentially transformative experiences. The range of such activities encouraged by 50 FBOs, mostly in the United States, suggests that US-based FBOs ask less of their constituents than do European FBOs, and offer them more limited means of expressing solidarity. The practice of encouraging social investment in microfinance funds or even in projects of the FBO itself is beginning to grow in the United States. Nelson profiles several FBOs that motivate high levels of constituent engagement, arguing that volunteering, education, personal spiritual disciplines, and community engagement are all involved in creating a culture of service and solidarity.

Microcredit and adjustment to environmental shock: Evidence from the Great Famine in Ireland

The stage of the formation and establishment of a market economy in Georgia raises the necessity for economic science to solve fundamentally different problems concerning the improvement of the investment environment and investment climate in national economy. After the collapse of the former Soviet Union, the replacement with new relationships has been quite difficult and painful in which foreign investments should play a crucial role. Issues to be discussed include the questions that explore some of the categories and the constraints of the investment climate (potential). All this leads to the relevance of the article and, therefore, determines the purpose of the article. The research process uses general dialectical methods of socio-economic research (description, analysis, systematization, abstraction, synthesis) as well as modern methods of research of economic theory (systemic, institutional, evolutionary). The scientific aim of the research is to highlight the current issues of the investment environment and investment climate in economy, to study the transformation processes taking place in Georgia during the last two decades, to conduct analysis using proper methods, to show the current social and political as well as other important processes, to generalize them and to form proper opinions. Findings based on research suggest that it is possible to speed up the process of economic development of Georgia. However, the situation will remain difficult in the region and the factors causing the recession _ instability in oil prices and the weakening of the national currency against the US dollar will still be present. In conclusion, the opinion can be formed that a stable and predictable legislative process is important for the investment environment. Therefore, all the parties that may undergo the changes should be informed and involved in every project planned by the government; At present, it becomes necessary to further extend the deregulation policy, which should include the development of financial and investment sectors and support of the establishment of appropriate infrastructure, promotion of the further development of microfinance institutions, investment companies and funds, designing the system of investment insurance and stimulation, elimination of unnecessary bureaucracy and artificial barriers, etc.

The President of the World Bank outlines the contribution made by the Bank to reducing poverty through promoting small enterprises and microfinance. The World Bank has been active in the Consultative Group to Assist the Poorest (CGAP), which promotes best practice in the microfinance industry and funds selected institutions to bring financial services to the poor. The new Small Business Development Initiative aims to benefit small and medium businesses by, among other things, supporting the market for private-sector business development services. A major role of the World Bank is to gather together and distill the knowledge of many donors and, in publishing these lessons of experience, Small Enterprise Development plays a part.

The purpose of this study was to determine the role of microfinance institutions in empowering the small and medium-sized communities. SMEs really need the role of microfinance institutions, especially in terms of funds to expand markets and develop their businesses, so as to make a large contribution to the national economy. The role of MFIs has been tested, survived the economic crisis and even strengthened. MSMEs are business units where the Indonesian economy has so far relied heavily on MFIs. It is not surprising that many parties have turned their attention to MFIs, but the attention given has not fully touched the face of MFIs with fundamental questions. microfinance institutions so that they can actually strengthen and develop as micro, small and medium enterprises, especially financial institutions in small communities. This microfinance institution was established because it was driven by the community's need for funds to develop their business. the question about the need for funds faced by the majority of the community has been responded positively by several people who are willing to lend some of their funds for MSME capital. Funds lent to customers come from the MFI's own funds or from depositing funds into the microfinance fund of the client's institution. Judging from the potential and funding sources that have been implemented, the MFI actually serves customers and manages them based on. If financial institutions can coordinate fund management with each other, then this can be a huge advantage