Microfinance Field Research Articles

Microequity: some thoughts for an emerging research agenda

Abstract This paper summarizes recent research in performance-based microfinance, and outlines future directions for research. We use the term ‘microequity’ to refer to any small-enterprise financing contract in which the repayment owed in each instalment depends positively upon the variable performance of the enterprise. We summarize research from financial economics and development economics to highlight the importance of implicit insurance in microequity contracts, and present a theoretical framework to illustrate the potential of microequity in supporting capital investment and incentivizing asset use. We conclude by highlighting directions for future research in this emerging field of microfinance.

Understanding the dimensions of women entrepreneurs’ empowerment: a systematic review of the microfinance literature and avenues for research

PurposeThe purpose of the present paper is to provide a systematic overview of dimensions that need to be enfolded or considered in microfinance policies and strategies designs as well as impact studies aiming to empower or assess the empowerment of a specific category of women, namely women entrepreneurs. Afterward, the study aims to suggest some directions for future studies.Design/methodology/approachTo meet its purpose, the paper applies the systematic review approach. The applied methodology follows guidelines for systematic reviews of social and economic interventions as set out by the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA). More specifically, the authors examine 87 empirical papers from 6 databases investigating the impact of microfinance institutions on the empowerment of women entrepreneurs.FindingsOverall, findings of the study suggest that dimensions of the empowerment of women entrepreneurs are formed and conditioned by normative, cognitive and regulative institutional logics. Additionally, the systematic review suggests key research avenues and calls for more inclusive empirical studies in terms of geographical coverage, microfinance services/products assessed and method designs applied.Research limitations/implicationsFindings of the current review provide clear theoretical contribution and useful practical implications in the field of microfinance and the empowerment of women entrepreneurs. On the one hand, the study suggests to scholars key avenues for future studies likely to bring new insights in terms of theory, context and methods. On the other hand, this study extents the understanding of microfinance practitioners on the concept of women empowerment as the field of female entrepreneurship is concerned. This implication is likely to enable the design of appropriate microfinance strategies and policies, allowing women entrepreneurs to achieve an overall empowerment.Originality/valueThe present paper contributes to the debate around the multidimensionality of the concept, “women empowerment.” The multidimensional nature of the addressed concept is well established in the existing literature. However, to the best of the authors’ knowledge, no study has provided a conceptual analysis of empowerment dimensions of a particular category of women, namely women entrepreneurs. Unlike most of the studies assuming that all women face identical challenges, the present paper brings new insights on the topic as it is built on a different assumption. The paper takes ground from the institutional theory and applies it to the specific case of female entrepreneurship.

Microfinance Research in India During 2001–2021: A Bibliometric Analysis with Its Social Impact Using Altmetrics

Microfinance has a significant impact on the country’s development. It strives to support economically disadvantaged communities in achieving higher levels of wealth development and income security for both households and entire communities. It assists small loans to initiate micro-level business activities which fosters financial autonomy among them. It also ensures better society and growth of a nation. The objective of the study is to map the preceding research direction in the field of microfinance in India and offers guidance to writers and researchers entering the subject of microfinance in India by providing data on year-wise publications, citations pattern, authorship pattern, types of documents preferred by the researchers, preferred sources of communication and institutions mostly associated with microfinance-related literature in India. The study also covered the critical issues related to growth of microfinance in India. Major keywords used in the microfinance research and their association with other keywords, examines the preferred countries for collaboration by Indian authors in microfinance-related studies, and the social impact of top cited articles published during the study period.

Analisis Nilai-Nilai Spiritual di KSPPS Khidmatul Ummah Bogor

This research is about the Implementation of Spiritual KSPPS Khidmatul Ummah Bogor by using four variables as an analytical tool, namely sharia exemplary, sharia compliance, sharia education and sharia training. The Islamic economic discourse in the field of micro finance has not studied the implementation of Spiritual Intermediation in a holistic manner, even though the difference between Conventional Microfinance Institutions and Islamic Financial Institutions is the Spiritual and Social aspect. This analysis method uses a qualitative research style. The research approach is carried out in two stages, namely pilot research and pre-research. The results of this study are KSPSS Khidmatul Ummah Bogor institutionally is a sharia microfinance institution incorporated as a Sharia Savings and Loans Financing Cooperative Primary Scale District, which is engaged in empowering the poor and unbanked by carrying out social functions in Biatul Maal and business functions (tijari) through Baitul at Tamwil KSPSS Khidmatul Ummah. It is intended to be able to solve the economic problems of the lower middle class community in West Bogor, Bogor Regency. By implementing five pillars in its operations, namely: Alms, Savings, Soft Loans, Financing and Investment. And aspects of spiritual intermediation at KSPPS Khidmatul Ummah Bogor include: it is in accordance with Sharia principles and consistently exemplified by the administrators and managers. Sharia compliance has not been optimized properly. KSPSS Khidmatul Ummah Bogor in carrying out Sharia education and training to internal has been very intense, diverse and programmed. But for the external is not maximal, intense and diverse.
 

DO FIELD PARTNERS ADD VALUE TO CROWDFUNDED MICROFINANCE? AN INDUSTRY APPROACH

The framework of this study is the field of crowdfunded microfinance that represents a way to scale up financial access, leveraging digital technology applications. A key element of this value chain is the field partner, represented by a local Microfinance Institution (MFI) that intermediates between the crowdfunding platform and the individual borrowers or group of borrowers. In this context, the main objective of this paper is to measure the financial and prosocial contributions of field partners through crowdfunded microloans. Methodologically, this prosocial impact is measured with an innovative approach, by using network theory to describe the supply and value chains that link crowdfunding investors to field partners and, consequently, to micro-borrowers. The main contribution of this study is the introduction of a global indicator able to quantify the increase of the social impact and the financial system of a country, coming from the presence of ESG-compliant crowdfunded microloans.

Analysis of the Double Bottom Line Performance of Microfinance Institutions in India and the Need for Regulation in the Indian MFI Sector

Poverty and Financial exclusion are the greatest challenges facing an emerging economy like India. Many countries, including India, had implemented subsidised credit to irradicate poverty, which only increased the NPA (Non-Performing Assets). MFIs (Microfinance Institutions) were formed to bridge the gap between the formal financial sector and the financially excluded. Social commitment forms one of the basic characteristics of the MFIs, and now its scope is broadening to social performance. However, like any other organisation, to continue their operations in the long run, financial sustainability is a key determinant for MFIs. Thus, the double bottom line commitments imply balancing financial and social performance. Certain developments in recent years brought a fresh focus on the problem of regulation in the field of microfinance. In the present scenario, the Indian MFI sector is largely unregulated. In India, a variety of legal forms of MFIs are found like NBFC-MFIs (Non-Banking Financial Companies-Microfinance Institutions), NBFCs, SHGs (Self Help Groups), Society, NGOs (Non-Governmental Organisations), Trusts, and Sec. 8 Company, etc., among which the lion's share goes to NBFC-MFIs/NBFCs. The paper analyses the double bottom-line performance of MFIs in India using secondary data of Indian MFIs extracted from various reports of Sa-Dhan, the World Bank, and the RBI (Reserve Bank of India). The paper also attempts to highlight the need for a regulatory body to guide, supervise and regulate different players in the Indian MFI sector.

Challenges for financial inclusion through microfinancing: the goal incongruence between top management and the loan officers

The drift of mission from social orientation to commercial orientation has created issues at the firm level as well as the social level. Foci of the study to explore the reasons for emerging issues in the microfinance field. Mainly through a qualitative approach and from the agency theory standpoint, the study attempt to answer why and how goal incongruences occurred between top management and loan officers. The thematic analysis results reveal that institutional process, agency variables and cost, and personal reasons of loan officers, including self-interest,have contributed to the goal incongruence. Notably, the inability to verify the loan officer’s behaviour and manage bonding cost and monitoring cost at an optimal level due to weaknesses of the internal process can be recognised as the causes for the goal incongruence. In addition, theoretical contribution, implications, and limitation of the research are also considered and discussed.

Analyzing governance challenges using Process Net-Map: a case study of a government microcredit scheme in Bangladesh

PurposeThis paper aims to examine the governance challenges confronted by a government microcredit program in Bangladesh following a case study approach.Design/methodology/approachA novel qualitative research tool called process net-map (PNM) was applied to develop a framework for visual understanding of the exact credit implementation process and to identify the actors responsible for creating governance challenges. Key informant interviews were also conducted to identify and distinguish the challenges faced by both the supply-side and demand-side stakeholders.FindingsThe findings reveal that the studied case faced problems in allocating adequate resources to human and physical capacity development. It was combined with the shortage of funds that made it impossible to meet the clients’ expectations. The lack of legal and regulatory framework disabled the organization from controlling political influence and corruption in the system. Moreover, the policy of lending only to groups proved counterproductive as it led to the exclusion of potentially viable borrowers.Practical implicationsThe key recommendation of the study is on increasing the microcredit fund and a reform of the group lending policy along with several other recommendations.Originality/valueThe PNM is a newly developed participatory mapping technique that has not been applied in the field of microfinance. Therefore, the use of this method may add new knowledge of conducting an in-depth analysis of why such challenges are associated with mostly public microfinance programs and how they are linked to the implementation process. The challenges encountered are relevant for the implementation of developmental programs that are dependent on the allocation of public funds.

Impact of using Islamic Microfinance Products on Mauritanian Microentrepreneurs’ Income: Evidence from PROCAPEC- Nouakchot

This study examines the impact of using Islamic microfinance products on the Mauritanian microentrepreneurs’ income level. The study is purely quantitative, and it uses cross-sectional design data, which was gathered through a questionnaire from a sample of 381 beneficiaries of an Islamic microfinance institution (PROCAPEC). It uses Structural Equation Modeling (SEM) to determine the effectiveness of using Islamic microfinance products on the beneficiaries’ income as well as to test the moderator effect of gender on the relationship in the model. The research found out that the use of Islamic microfinance products has increased the beneficiaries’ income; however, gender has no moderator effect on the relationship between the usage of Islamic microfinance products and income level. These findings help the policymakers and managers of Islamic microfinance consider the factors increasing Islamic microfinance products’ usage to reduce poverty in the country. This study is among the pioneer in the field of Islamic microfinance in Mauritania due to the scarcity of studies in the geographical context.

Financial Environment and Risk of Stock Price Crash

The risk of stock price crash has become an important topic in the field of macroeconomics and micro-finance in recent years, but there are relatively few researches on the risk of stock price crash from an external perspective. Therefore, this paper takes China’s GEM listed companies as samples to empirically test the impact of financial environment on stock price crash risk. The research finds that there is a significant negative correlation between the financial environment and the risk of stock price crash, that is, the better the financial environment of the GEM listed company is, the lower the risk of stock price crash is. This conclusion still exists after controlling for the conservatism and endogenicity.

РАЗВИТИЕ ИННОВАЦИОННОГО И ИНФОРМАЦИОННОГО ПОТЕНЦИАЛА В ЭКОНОМИЧЕСКОМ ПРОСТРАНСТВЕ РЕГИОНА ПОД ВОЗДЕЙСТВИЕМ РЫНОЧНЫХ СИЛ И ГОСУДАРСТВЕННЫХ ИНСТРУМЕНТОВ НА ПРИМЕРЕ ЮФО

In the article, the author examines the key aspects of the development of innovation and information potential in the economic space of the region under the influence of market forces and state instruments on the example of the Southern Federal District, identifies the essence and factors of innovation and information potential, principles and methods of assessing the innovation and information potential of the region. An assessment of the innovative and information potential and the activities of state authorities in the field of investor support in the region is given. Recommendations for improving the directions of increasing the innovative and information potential of the Rostov region are proposed, and the author also suggests directions for improving the innovative and information potential in the economic space of the region based on the results of a study of theoretical and applied experience and the problems of domestic technology transfer with the participation of start-up companies of the Southern Federal District. The implementation of the investment strategy of the regions of the Southern Federal District is a task that represents a multidimensional complex of interrelated and mutually dependent actions. Based on the results of the analysis, the following measures were proposed: 1) improving support for small and medium-sized businesses (including microenterprises) in the field of microfinance for innovative startups by expanding access to microfinance for innovative startups and expanding development opportunities for small and medium-sized businesses (including microenterprises) receiving microfinance; 2) the introduction of the digital platform Strategy of the Russian Federation in the Rostov region, which will allow entrepreneurs to get all the necessary information about public services and engage in their registration using remote technologies.

WITHDRAWN: A comprehensive analysis of “Pradhan Mantri MUDRA Yojana” – Achievements and bottlenecks

Abstract To foster financial inclusion and promote the growth of micro-entrepreneurship, the government of India had launched the MUDRA programme in 2015. The basic idea behind this government initiative is to provide help to micro-entrepreneurs in fulfilling their monetary needs and also making possible the establishment of more micro-finance institutions. The core ideology is the reduced dependence on government interventions and socialistic measures such as subsidy to a more self-reliant set of principles. The existing infrastructure of financial services has been used to implement the scheme. Through this paper, the author attempts to analyze the present trend of implementation of the scheme. The disbursement trend has been analyzed by referring to the government reports as well as scholarly and journalistic work in this field. The paper may provide a ready reference to scholars/academicians interested in the field of financial inclusion, micro-finance and government policies.

Determinants of Micro Finance Bank Stability in Pakistan

In developing countries like Pakistan MF is anticipated to play a vital part in lowering poverty and raising the standard of living of people. The performance of MF is a key to the development of society and economy of Pakistan. A sustainable MF structure in a country can be helpful in developing small scale businesses. Success of MF in Bangladesh and other parts of the world is a signal that the field has major role in changing lives of low people. Despite the importance of the field of micro finance in a country like Pakistan, it has been explored rarely by academicians. The study is aiming to investigate the fiscal viability of MF banks in Pakistan. MF Banks are institutions that provide micro fiscal assistance to people. The study is based on the MF banks in Pakistan. Performance of MF can be judged through various dimensions. The study is limited to the analysis of fiscal sustainability of MF. The scope of study is limited to the MF banks in Pakistan. The time period of the analysis is from 2010 to 2017 due to availability of the data for this time period.

A Review of Existing Literature on Sustainability, Mission Drift and Loan Defaults

As the abundance of research work has been done in the field of Microfinance in the last two decades. This research work deals with the issue of factors affecting operational self-sufficiency, financial self-sufficiency and loan repayment performance and the trade-off between financial performance and outreach to poor and women clients. The section one deals with prior research work on factors affecting the sustainability of MFIs. Section two reviews prior research works on Mission drift i.e. trade-off between sustainability and outreach. Finally, section three deals with the factors affecting loan repayment performance.

Composition of Indian microfinance: a case for competing logics

PurposeThis paper aims to understand how competing logics can co-exist in the organizational field of Indian microfinance.Design/methodology/approachThe paper uses the theoretical lens of an organizational field to understand the composition of the microfinance field. Using the definition of an organizational field, key players in Indian microfinance are identified and their interactions within the field are analysed to understand the emergence and co-existence of multiple logics. The data used for this paper are collected from published work on Indian microfinance.FindingsThe co-existence of competing logics is sustained through the creation of two sub-fields within Indian microfinance. Each of the sub-field is dominated by one institutional logic. The field originated in developmental logic of microfinance and gradually adopted the banking logic post-2000. The sub-fields are dominated by different organizational forms with different nature of interaction within the field.Research limitations/implicationsActors within the field would experience institutional complexity with lesser intensity because of the existence of two distinct sub-communities with individual logic. Dual logics can sustain itself independently provided these are embedded in two different sub-communities. Despite the emergence of a new logic, the previous logic can still remain relevant given the enabling support from institutional infrastructure.Practical implicationsThe manifestation of development and banking logics through practices and the belief system in Indian microfinance would offer useful insights for social entrepreneurs balancing the dual goals of hybrid organizations. Due to the sub-communities, a professional working with different forms of organization would experience little pressure to adjust to diverse logic and would also experience no or little identity conflict.Originality/valueThis paper focuses on the microfinance sector in India as an organizational field and explores the mechanism of co-existence of the dual goals of microfinance at the field level.

Science Mapping of the Global Knowledge Base on Microfinance: Influential Authors and Documents, 1989–2019

The use of microfinance in poverty alleviation and, by extension, as an instrument for sustainable social and economic development, represents a novel idea in sustainable finance. This study employed science mapping to examine 4049 Scopus-indexed documents explicitly concerned with microfinance. The goals of the review were to document the distribution of microfinance literature by type, volume, time, and geography, and to identify influential authors, articles, and a potential intellectual structure of this knowledge base. The first microfinance research was conducted in 1989, but the field attracted increased attention only after 2006, when the Nobel Peace Prize was awarded to microfinance pioneer Muhammad Yunus. This study does not find any single dominant school of thought in the field of microfinance, but rather identified three thematic research clusters: (1) a concentration on institutional aspects of microfinance, (2) scholars who used sophisticated research methods to evaluate the impact of microfinance, and (3) groundbreaking microfinance literature related to social justice more generally. As the first-ever, comprehensive bibliometric review of research on microfinance, this study provides benchmarks against which to assess the future evolution of this literature, a reference for scholars entering this domain, and targets for future development of this field of sustainability scholarship.

Islamic Microfinancing by the Banking Sector of Pakistan: Problems and Solutions

This study highlights the obstacles which limit the penetration of the banking sector in the field of Islamic microfinance in Pakistan, keeping in view the practitioners’ perspective as to how these obstacles can be overcome. In Pakistan, where approximately sixty percent (60%) of the population is living below the international poverty line, Islamic microfinance has the potential to play a vital role in alleviating poverty. Unfortunately, the banking sector of Pakistan is reluctant to contribute in Islamic microfinance due to some limitations from the bankers’ perspective. Qualitative approach has been followed in this study in which semi-structured interviews were conducted with twenty-six participants from all over Pakistan, including five from Islamic, seven from conventional, thirteen from microfinance and one from an Islamic microfinance bank. Interviews were conducted with the board of directors, Sharīʿah board members, senior management, and microfinance heads. According to the experts, the mindset of bankers, lack of collateral, weak role of the State Bank of Pakistan (SBP) and the government of Pakistan in setting targets, limited availability of sector targeted products, lack of customer awareness, lack of initial capital, time consumption and documentation problems are among the issues faced by the banking sector. These experts emphasized the crucial role of the SBP and government support to promote Islamic microfinancing through banks. State Bank of Pakistan (SBP) as regulator and other commercial banks, Islamic microfinance banks and their boards of directors, Sharīʿah board members, senior management, and microfinance heads can implement the outcomes of this study.

A Bourdieusian perspective in exploring the emergence and evolution of the field of Islamic microfinance in Indonesia

PurposeMicrofinance institutions (MFIs), including Islamic microfinance institutions (IMFIs) in Muslim countries, have spread across the globe and transformed into a new industry. However, how IMFIs in Indonesia evolved to become an important sector serving society has not been rigorously explored. Therefore, the purpose of this paper is to address the lacuna on the emergence of an industry by examining the development of Islamic microfinance sector in Indonesia.Design/methodology/approachThe paper adopts the historical research method to narrate the evolution of this specific sector based on the data collected through oral history and published academic research documents during various periods of Indonesia’s economic and political milieu.FindingsThis paper demonstrates that the emergence and development of IMFIs in Indonesia has been shaped within the wider process of socio-political changes, particularly, the role of Islamic movement and politics in Indonesia.Originality/valueMost studies investigating the emergence and transformation of institution or industry adopt the static approach, which has been criticised as it fails to consider the process of emergence, growth path and the survival of organisations. Hence, this paper contributes to the literature by analysing the institutional evolution by locating the institution inside its wider environmental context by using Bourdieu’s concept of field to narrate the historical development of IMFIs from its emergence and evolution to become a significant new industry in the country.

A Three-Dimensional Model of Women's Empowerment: Implications in the Field of Microfinance and Future Directions.

Women’s empowerment is an important goal in achieving sustainable development worldwide. Offering access to microfinance services to women is one way to increase women’s empowerment. However, empirical evidence provides mixed results with respect to its effectiveness. We reviewed previous research on the impact of microfinance services on different aspects of women’s empowerment. We propose a Three-Dimensional Model of Women’s Empowerment to integrate previous findings and to gain a deeper understanding of women’s empowerment in the field of microfinance services. This model proposes that women’s empowerment can take place on three distinct dimensions: (1) the micro-level, referring to an individuals’ personal beliefs as well as actions, where personal empowerment can be observed (2) the meso-level, referring to beliefs as well as actions in relation to relevant others, where relational empowerment can be observed and (3) the macro-level, referring to outcomes in the broader, societal context where societal empowerment can be observed. Importantly, we propose that time and culture are important factors that influence women’s empowerment. We suggest that the time lag between an intervention and its evaluation may influence when empowerment effects on the different dimensions occur and that the type of intervention influences the sequence in which the three dimensions can be observed. We suggest that cultures may differ with respect to which components of empowerment are considered indicators of empowerment and how women’s position in society may influence the development of women’s empowerment. We propose that a Three-Dimensional Model of Women’s Empowerment should guide future programs in designing, implementing, and evaluating their interventions. As such our analysis offers two main practical implications. First, based on the model we suggest that future research should differentiate between the three dimensions of women’s empowerment to increase our understanding of women’s empowerment and to facilitate comparisons of results across studies and cultures. Second, we suggest that program designers should specify how an intervention should stimulate which dimension(s) of women’s empowerment. We hope that this model inspires longitudinal and cross-cultural research to examine the development of women’s empowerment on the personal, relational, and societal dimension.

Contributions and challenges in the struggle to end poverty: the case of Kiva

ABSTRACTThis study discusses the American microfinance nonprofit organization, Kiva Microfunds, its organizational development and the impact of its approach to microfinance on the microfinance industry generally. The paper sees Kiva’s particular contribution to the field of microfinance as drawing on internet technologies to bring microfinance to a global user base. As it grew, it maintained is leadership in the niche it created, but it also faces many challenges. We conduct a SWOT-inspired analysis in which we specifically focus on what have been some of the key factors that have led to Kiva’s success and what may be areas of vulnerability that threaten its position of strength, particularly the high interest rates it charges, and the emergence of competitors that may be more effective than Kiva in their shared mission to alleviate poverty. We briefly examine some literature that challenges the received view on the overall value of microfinance and consider some implications for Kiva and conclude by noting that in the current market, Kiva will need to draw on its corporate history of innovation if it hopes to maintain its position of leadership in the face of new organizations like Acumen Fund and One Acre Fund that take different routes to the same goal of reducing poverty.