ABSTRACT This study evaluates artificial neural networks (ANN) as credit-scoring tools for microloan allocation in a public non-profit microfinance institution. Using data from vulnerable Uruguayan entrepreneurs, the model incorporates borrower, business, and loan characteristics available at application. Results show that ANN substantially outperform traditional approaches in predicting structural default, defined as repayment of half or fewer scheduled instalments, rather than minor or temporary delinquency. The findings demonstrate that low-cost, readily available information can improve default-risk assessment. ANN can complement loan officers’ judgement, optimise resource allocation, and reduce structural default, thereby strengthening the institution’s financial sustainability and resilience.one

The traditional practice of rice paddy pawning remains a financing mechanism used by rural communities to meet economic needs and capital for agricultural businesses. While it provides quick and easy access to financing, this practice often places farmers at a disadvantage, as the pawn recipient receives economic benefits from land management and harvests during the pawn period. This situation indicates problems in rural financing governance, particularly regarding the protection of farmers' productive assets and weak regulations governing the practice of rice paddy pawning. This study aims to evaluate the practice of traditional rice paddy pawning from a public policy perspective, analyze its alignment with Yusuf Qardhawi's concept of rahn, and formulate a policy model that can strengthen farmer protection. This study used a qualitative approach with a case study design in Balang Pasui Village, Jeneponto Regency. Data were obtained through interviews, observation, documentation, and literature review, then analyzed descriptively and comparatively. The results indicate that the traditional rice paddy pawning practice is effective as an alternative financing source, but does not fully meet the principles of justice, property rights protection, and welfare as proposed by Yusuf Qardhawi. Based on the analysis, this study formulates a Community-Based Sharia Rahn Policy model that integrates regulations for farmer asset protection, strengthening Islamic microfinance institutions, community-based supervision, and Islamic financial literacy. This model is expected to support the realization of fairer, more inclusive, and sustainable rural financial governance

ABSTRACT This study aims to re-examine the impact of specialization in lending to women and the degree of competition on the inefficiency of microfinance institutions (MFIs), in order to reconcile divergent empirical results within the West African Economic and Monetary Union and Economic and Monetary Community of Central Africa. One possible explanation for these contradictions is the distinction between unobserved heterogeneity and MFIs’ efficiency level which has not previously been accounted for. To test this idea, we apply the method developed by Wang and Ho (2010), which distinguishes heterogeneity from inefficiency. Specifically, we use the stochastic frontier approach to estimate a translog cost function for a sample of 122 MFIs operating in 12 countries over the period 2003–18. We decompose operational expenses into administrative, personnel, and depreciation expenses to estimate loan production technology. The results highlight that MFIs that specialize less in lending to women have higher cost efficiency and that competition is associated with decreased cost efficiency.

Financial literacy is an essential factor in improving financial inclusion and investment decision-making among marginalized communities such as tribal women. In India, financial inclusion initiatives have expanded rapidly in recent years. Recent estimates show that 55–60% of women in India hold bank accounts, while rural account ownership has crossed 50%. Between 2021 and 2025, women’s participation in formal financial activities increased due to the growth of digital banking, Self-Help Groups (SHGs), microfinance institutions, and financial literacy programmes. At present, India has more than 80 lakh Self-Help Groups with over 9 crore women members. Women also constitute nearly 60% of microfinance borrowers, indicating their growing role in small-scale financial activities. In addition, digital financial transactions in rural areas have increased by more than 40%, and the use of mobile-based banking services has expanded significantly. Despite these improvements, tribal women continue to experience financial exclusion. Surveys suggest that only about 30–35% of tribal women possess basic financial literacy, while less than 25% are aware of diversified investment options such as insurance, mutual funds, or government savings schemes. Limited education, irregular income, and lack of financial awareness further restrict their participation in investment decisions. This study focuses on tribal women in Mysuru District, examining financial literacy levels, awareness of savings and investment instruments, and risk perception influencing financial behaviour. The findings are expected to highlight how improved financial literacy can enhance investment participation and economic empowerment among tribal women.

Women’s financial empowerment is an important dimension of inclusive growth, but the empirical evidence on the determinants of women’s financial empowerment in the context of the developing world remains scarce. The present study attempts to examine the determinants of women’s financial empowerment in the context of the women beneficiaries of microfinance services in Nepal. The primary data were collected from 400 women beneficiaries of some microfinance organizations in Nepal through the structured questionnaire method. The study applied various statistical tools, i.e., descriptive statistics, correlation analysis, and regression analysis, to examine the relationship between women’s financial empowerment and various socio-economic variables. The findings of the study suggest that decision-making power is the most important factor in women’s financial empowerment, followed by asset ownership, as these two variables are highly correlated with women’s financial empowerment at 0.352 and 0.319, respectively. On the other hand, family support, income, and education are the other important determinants of women’s financial empowerment, as these variables are highly correlated with women’s financial empowerment at 0.231, 0.176, and 0.084, respectively. The study also found that the regression analysis explains 61.2 percent of the variation in women’s financial empowerment, as the R² value is 0.612 in the present study. In line with the broader literature on financial inclusion, the study proposes that the addition of non-financial services such as financial literacy and advisory services can potentially improve empowerment outcomes. The results are useful for microfinance institutions, cooperatives, and development agencies aiming at promoting women’s financial empowerment in developing countries.

Microcredit in Bangladesh has grown rapidly and has helped reduce poverty and improve livelihoods, but its long-term effectiveness remains mixed and is limited by debt risks and structural economic challenges. The main purpose of this study is to examine the history, current situation, effectiveness, and previous poverty impact studies of microcredit in Bangladesh. This study is based on documentary facts from various sources. Grameen Bank, BRAC, ASA, TMSS, BORU Bangladesh, and DISA were selected as sample institutions. The data were analyzed for the period from 2013 to 2020. The documentary review showed that Bangladesh experienced notable increases in loan payment, loan amount per borrower, net reserves per microfinance institution (MFI), and credit outstanding per MFI. The study also found that rural households have historically been the main focus of issues related to income, consumption, asset accumulation, health, and education. The impact studies on poverty, income and consumption, health services and hygienic practices, and small entrepreneurship development are presented in tabular form. The recovery rate showed a continuous decline during 2020, even though most key indicators, such as loan disbursement, average loan size per borrower, net reserves per microfinance institution, and outstanding loans per institution, demonstrated notable improvement. The findings also suggest that microcredit has generally benefited low-income households by raising their income and consumption levels while supporting poorer households in improving their hygiene and overall health conditions.

The Covid-19 pandemic resulted in one of the most severe economic disruptions in India’s recent history. The nationwide lockdown, restrictions on mobility, and supply chain breakdowns caused a significant decline in industrial output, employment, and income levels. Small businesses, daily wage workers, and micro, small and medium enterprises (MSMEs) were among the most affected groups. In response, the Government of India implemented various recovery measures, including the Atmanirbhar Bharat Mission, emergency credit support schemes, and vaccination campaigns to stabilize the economy. Alongside government intervention, the microfinance sector played a crucial role in strengthening the livelihood of economically weaker sections. Microfinance Institutions (MFIs) and Self-Help Groups (SHGs) helped by providing small collateral-free loans, credit assistance, training, and promoting self-employment and local production. This study examines the overall economic impact of Covid-19 in India and highlights the contribution of microfinance in post-pandemic recovery. The findings suggest that microfinance has been a key driver in supporting income generation, women empowerment, and grassroots economic resilience, thereby promoting inclusive and sustainable development

Financial exclusion remains a critical barrier to sustainable economic development in emerging economies, particularly among microentrepreneurs who depend on informal financial credit (IFC) to sustain their livelihoods. This study aims to examine the determinants and consequences of IFC utilization and their relationship with distinct delinquency patterns among microentrepreneurs in the Peruvian Amazon. A cross-sectional survey was administered to 310 microentrepreneurs from the central market of Yurimaguas during the first quarter of 2024 using partial least squares structural equation modeling (PLS-SEM). Four determinants of IFC—motivation, lender choice, loan conditions, and financial stress—were tested alongside their influence on three delinquency types: accidental, intentional, and negligent. The results indicate that psychological motivation and social lender choice are the primary and statistically significant drivers of IFC utilization, whereas loan conditions showed no significant association. Regarding delinquency outcomes, IFC is significantly and positively associated with accidental and intentional delinquency, yet paradoxically shows a significant negative association with negligent delinquency, suggesting that trust-based social enforcement mechanisms embedded in informal lending relationships may constrain negligent default behavior. These differentiated effects underscore the dual nature of informal credit as both a livelihood-sustaining mechanism and a source of financial vulnerability. The findings contribute to the understanding of financial sustainability in excluded populations by providing empirical evidence that effective interventions must address the psychological and relational dimensions of credit behavior, rather than focusing solely on structural loan characteristics. Key limitations include the cross-sectional design, which precludes causal inference, and the geographic focus on a single market in the Peruvian Amazon, which restricts generalizability. This study offers actionable insights for policymakers and microfinance institutions seeking to design inclusive financial strategies aligned with Sustainable Development Goals 1 (No Poverty), 8 (Decent Work and Economic Growth), and 10 (Reduced Inequalities).

We try to study the relationship between microcredits and sustainable development in some Islamic economics over the period 1993–2021. We use a multi-step approach based on different statistical tests and econometric models in order to discern the type of correlation that could exist between microfinance and sustainable development. The experimental results show that there is a positive and significant relationship between the indicators of microfinance and sustainable development. By offering the opportunity to access microcredit, microfinance institutions can contribute to reinforcing sustainable development. Therefore, households should be encouraged to create investment opportunities and increase their demand for microcredit. In business settings, the term sustainability is defined along these triple bottom lines, such as social, financial, and environmental, and highlights activities that improve a firm’s social and environmental performance, alongside its financial performance.

The environmental, social, and financial performance of micro-finance institutions: the moderating role of board gender diversity and board orientation on social goals

This study aims to analyse the financial performance of microfinance institutions (MFIs) in Afghanistan for an extremely unstable period, for the financial years of 2014–2015 to 2023–2024, to address significant political instability and the COVID-19 pandemic. Using panel data from the top larger MFIs in Afghanistan, the study looks at the effects of internal institutional characteristics on the return on assets (ROA), which is an indicator of financial sustainability. Panel regression techniques are employed to analyse the relationships between these factors and institutional performance. The findings indicate that branch expansion enhances ROA; therefore, increasing branches led to greater profitability, even amid political instability and uncertain conditions. While the gross loan portfolio had a negatively significant effect on financial performance, this finding indicates that quality and assessing the associated risk of the loan portfolio may be challenging. Total income and the number of active borrowers were less significant or impactful variables. Overall, the findings indicate that MFIs encountered financial problem and even some of them led to stop their services, moreover, highlighting the need for risk-adapted progress and efficient portfolio control to maintain the financial viability of MFIs working especially in fragile or crisis-affected economies.

This project focuses on the two issues of microfinance and government subsidies and their effect on the lives of women in India and in particular, financial inclusion, generating income and becoming entrepreneurs. Microfinance institutions (MFIs), Self-Help Groups (SHGs) and other government programs, like PMJDY and MUDRA and NRLM and Stand-Up India have been an important factor in economic empowerment of women over the last ten years. The research examines the role of access to small loans, savings mechanism, digital financial services as well as community-based support systems in enhancing financial stability and livelihoods.

Sharia financial literacy refers to an individual's ability to understand, manage, and utilize financial products based on Islamic principles. Low literacy levels hinder optimal utilization of Islamic financial services. This study aims to analyze the contribution of KSPPS BMT Ibaadurrahman in improving members’ sharia financial literacy. This study employed a quantitative survey method with 60 respondents selected using simple random sampling. Data were collected through questionnaires, interviews, and documentation. Analysis techniques included validity and reliability tests, classical assumption tests, simple linear regression, t-test, and coefficient of determination. The results show a positive and significant effect of BMT contribution on sharia financial literacy. The regression equation is Y = 10.52 + 0.68X, with a correlation coefficient of 0.79 and R² of 0.62. This finding highlights the strategic role of Islamic microfinance institutions in enhancing financial literacy and inclusion.

This study examined the organizational risk readiness, extent of practices, and level of risk exposure of microfinance institutions in Ilocos Norte and determined whether organizational risk readiness predicts the degree of risk exposure. The study utilized a quantitative research design employing descriptive and inferential statistical methods. Data were collected from 116 staff members of selected microfinance institutions in Ilocos Norte using a structured survey questionnaire. The data were analyzed using mean, composite mean, and multiple linear regression analysis. Findings revealed that microfinance institutions in Ilocos Norte demonstrate a very high level of organizational risk readiness, with an overall mean of 5.68, interpreted as “Very Ready.” This indicates that risk governance structures, policies, technological capacity, financial resilience, and monitoring systems are well established within the institutions. In terms of operational practices, the results showed that the extent of practices of microfinance institutions is “Almost Always Practiced,” with an overall mean of 5.87. Among the service areas, micro-savings services obtained the highest composite mean, followed by microinsurance and microcredit services, while fund transfer services obtained the lowest composite mean, although all were still interpreted as almost always practiced. Despite the high level of readiness and consistent practices, the results revealed that microfinance institutions experience a high level of risk exposure, with an overall mean of 2.89 interpreted as “High Exposure.” Among the risk categories, liquidity risk obtained the highest exposure, followed by operational risk and credit risk, while market and external risk obtained the lowest exposure, though still classified as high. Regression analysis further showed that selected components of organizational risk readiness significantly predict risk exposure. Specifically, Risk Monitoring, Reporting and Compliance significantly predicted Credit Risk, while Risk Governance significantly predicted Operational Risk, Liquidity Risk, and Market and External Risk at the 0.05 level of significance. These findings suggest that governance structures and monitoring systems play critical roles in influencing the level of institutional risk exposure. Based on the findings, the study proposes a Strategic Risk Management Framework for Microfinance Institutions in Ilocos Norte aimed at strengthening governance, monitoring systems, operational resilience, liquidity stability, and market adaptability. The framework seeks to bridge the gap between organizational readiness and actual risk outcomes to enhance institutional sustainability and resilience in the microfinance sector.

Board Gender Diversity and Liquidity in Microfinance Institutions

Baitul Mal wa Tamwil (BMT) as Islamic microfinance institutions face challenges in creating sustainable service differentiation amid increasingly intense financial sector competition. This research develops the Community-Embedded Islamic Service Excellence (CEISE) Model as a theoretical framework to understand how the integration of Islamic values and community engagement creates competitive advantages in BMT operations. Using a qualitative case study approach at BMT NU East Java Pasongsongan Branch, the study involved in-depth interviews with 10 staff and 15 customers, participatory observation, and document analysis. Data were analyzed using the Miles and Huberman thematic analysis framework. Findings show that CEISE Model implementation through four main dimensions: Spiritual Service Dimension (SSD), Community Integration Mechanism (CIM), Adaptive Accessibility Framework (AAF), and Sustainable Intimacy Balance (SIB) successfully creates distinctive value propositions. Service innovations such as "pick-up service" systems (73% utilization), temporal flexibility (67% staff), and Islamic values-based approaches resulted in 89% customer retention, +73 Net Promoter Score, and 56% community participation. Integration of Islamic values (adl, amanah, ihsan, maslaha) at every service touchpoint creates emotional bonds transcending transactional relationships. This research provides theoretical contribution through CEISE Model development filling literature gaps on service excellence in religious-cultural contexts and practically provides strategic framework for BMT service optimization.

Background Capital adequacy is essential for the sustainable operation of microfinance institutions (MFIs). MFIs can expand their outreach to the low-income and marginalized people if the institutions are sustainable. Maintaining adequate capital is important from a regulatory perspective to ensure financial stability and sustainability. The objectives of this study are to examine the impact of capital adequacy on the profitability of Nepalese microfinance institutions (NMFIs). Methods This study is based on secondary data collected from the annual reports of the selected microfinance institutions. A descriptive and causal comparative research design was used. The study sampled 10 microfinance institutions from 57 purposively. The independent variables were core capital ratio, supplementary capital ratio, cash reserve ratio, capital adequacy ratio, and leverage ratio. The dependent variables were Return on Assets (ROA) and Return on Equity (ROE). The purposive sampling method was used. Results The findings of the study revealed that all relationships were positive, except for the leverage ratio, which had a negative relationship with all other variables. The study variables CCR, SCR, CAR, CRR, and LR significantly affect ROA, except LR. Similarly, the dependent variable ROE also has significant impacts on the study variables CCR, SCR, CAR, and CRR, whereas the LR has an insignificant impact on the leverage ratio. Conclusion The study brings real acuities to light, as intended by proper executives and governments, leading to a robust economic recovery and ensuring sustainable growth in Nepalese microfinance institutions. Regulators and policymakers may focus on improving the financial and non-financial performance of MFIs, including expanding their outreach to marginalized and rural populations through monetary policy.

This is the reason researcher conducted a study to assess the microfinance institution services and performance of small and Medium Enterprises (SMEs). The specific objectives in this research were to determine microfinance institution services that contribute to performance of SMEs in Nyarugenge District, to assess the performance of SMEs resulting from financial support of microfinance institution and to determine extent to which training facilities contribute to the performance of SMEs. This research used descriptive research design with two mixed methods (quantitative and qualitative). The target population was officials of credit department, employment team in finance department, officials in operation department of reseau Interdioscesain of Microfinance, Nyarugenge District. The total population was 111 from which a sample of 87 respondents were drawn. Simple random sampling techniques was used to select a sample and data were collected by using questionnaire and interview. Data analysis was done through Statistical Package for Social Science (SPSS) version 16. Research findings showed that 62.1% highlighted saving service facility to assist microfinance operations, 31% of respondents indicated that microfinance offers credits facilities, 6.9% of respondents said that the institution provide additional support services like financial advice as indicated by 48.2%, trainings facilities as indicated by 39.1% and business planning as indicated by 12.6%. Therefore, researcher recommends this institution to continuous cut off problems related to capital market, costs of financial services, capital access, collateral requirements, capital management, cost of registration, structural weakness in terms of governance, portfolio management and internal control for its sustainability. Keywords: Microfinance, Institution, performance, small and medium enterprise

Purpose This study aims to examine the impact of the increasing adoption of a commercial approach on the financial performance and outreach of microfinance institutions (MFIs). Drawing on institutional theory, it investigates whether commercialisation enhances MFIs’ financial performance and outreach while also considering the risk of mission drift. Design/methodology/approach A two-step system generalised method of moments estimation is applied to a dataset of 2,102 MFIs across 114 countries over a 15-year period. The study evaluates both traditional financial performance measures, such as return on assets and operational self-sufficiency, and outreach indicators, including number of active borrowers, average loan size (ALS) and new measures, such as market share of borrowers (MSB) and market share by assets (MSBA). Robustness checks, including the Arellano–Bond and Hansen tests, confirm the validity of the instruments and the reliability of the results. Further, the authors conducted mean difference tests to confirm the results. Findings Results show that commercialisation has no significant effect on the financial performance of MFIs. However, commercialisation is positively associated with breadth of outreach, as reflected in an increased number of active borrowers and with the depth of outreach, as reflected in larger ALSs. The increase in ALS suggests a shift away from serving the poorest clients, indicating mission drift. Additional results reveal that overall, commercial MFIs are moving towards larger scale and profitability but with reduced focus on their traditional social mission. Originality/value This paper extends the debate on commercialisation and mission drift in microfinance by using a large cross-country data set and multiple outreach measures, going beyond previous region-specific studies. It challenges the effectiveness of new outreach indicators such as MSBA in dynamic panel models and highlights the trade-offs between social and financial goals. The findings provide valuable implications for policymakers and practitioners, suggesting the need for frameworks that encourage MFIs to balance legitimacy, scale and sustainability with their original poverty alleviation mission.

This study analyzes legal protection for Micro, Small, and Medium Enterprises (MSMEs) acting as mudharib (partners) in mudharabah contracts at Islamic microfinance institutions (LKMS). Using a descriptive qualitative approach through a comprehensive literature review, the study uncovers an imbalance between formal regulations, such as Law Number 21 of 2008 concerning Islamic Banking and the DSN-MUI Fatwa Number 07/DSN-MUI/IV/2000, and field practices, which often deviate through modifications to mudharabah muqayyadah contracts. Findings indicate that 70% of disputes at the Sharia Financial Supervisory Agency (BPSK Syariah) stem from unproven claims of negligence, resulting in losses of MSME assets due to disparities in bargaining power. The study recommends a standard contract model, amendments to the Financial Services Authority Regulation (POJK), and sharia literacy training to uphold the principles of pure mudharabah, supporting financial inclusion and empowering MSMEs in Indonesia's Islamic economy. Thus, this research provides an important contribution to the development of fairer and more sustainable Islamic economic legal policies, particularly in supporting the strategic role of MSMEs as the main pillar of the national economy.