The Social and Financial Performance of Microfinance Institutions in the Middle East and North Africa Region: Do Islamic Institutions Outperform Conventional Institutions?

Abstract

AbstractThe performance of microfinance institutions (MFIs) is analysed over 2004–2015 on a sample of 67 MFIs in the Middle East and North Africa regions. It includes a subsample of 18 Islamic MFIs (IMFIs), whereof Solebusiness grant exclusively Islamic financial services, and Window provide 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 experience higher financial performance than IMFIs, and Window experience higher financial performance than Solebusiness. IMFIs do not experience higher social performance than conventional MFIs; whether conventional or Islamic, MFIs face a financial vs. social performance trade‐off. © 2020 John Wiley & Sons, Ltd.