Microfinance,the long tail and mission drift

Poor people were excluded from financial services until microfinance institutions (MFIs) emerged. The mission of MFIs is to alleviate poverty, contributing to women empowerment, especially in rural communities. Microcredits can be analyzed under Pareto's 80/20 Principle. Their clients are situated in the long tail of the wealth distribution function. This niche market is not very attractive, because of its high administrative costs, lack of deposits and the need for compensating low revenues with fluctuating subsidies. Some MFIs have drifted from their mission. This paper presents a model to explain microfinance mission drift, tested with hypotheses. The results from the empirical study show a pattern of mission centered MFI: a small NGO, with labor productivity, receiving donations and obtaining a high yield. It can be concluded that there is a need for reducing interest rates. According to the long tail theory, this could be done by using efficient technology, as it has been achieved in the e-commerce sector.     

Intellectual Capital: Firms’ Hidden Source of Service Quality in the Microfinance Industry in Uganda

The author examines the relative contribution of individual intellectual capital elements on service quality in Uganda's microfinance industry (MFI), adopting analysis of moment structures, a form of structural equation modeling. Other than relational capital, intellectual capital elements are strong predictors of service quality with predictive power of 34%. To boost the wealth of MFIs, managers should use a suitable intellectual capital blend that increases firm value. Since the results of this study clearly show that human capital is the most important intellectual resource, MFIs should source for competent people who play key roles in the industry.     

The Performance Impact of Informal and Formal Institutional Differences in Cross-Border Alliances

This study addresses the simultaneous and diverse effects of differences in informal and formal institutions on cross-border alliances’ financial performance. We utilize data from 405 microfinance institutions (MFIs), based in 74 developing countries, that have alliances with partners from developed countries. We find that the impact of informal institutional differences between MFIs and their cross-border partners is sigmoid-shaped, with performance first increasing, then declining, before improving again as informal institutional differences grow large. By contrast, formal institutional differences appear to be detrimental to MFIs’ performance. Consistent with our prediction, we find that MFIs’ cross-border experience moderates both formal and informal institutional effects.     

Gender discrimination and lending to women: The moderating effect of an international founder

Much of the microfinance rhetoric revolves around fighting female poverty, which is often the result of discriminatory gender norms. Also, the microfinance industry has always been influenced by foreign actors, who, according to the literature, promote women’s empowerment. Yet, little is known about how microfinance institutions’ (MFIs) outreach to women is affected by the interplay between societal norms and the actions of these foreign actors. In response, this study draws on two streams of institutional theory, institutional logics perspective and institutional work theory, to investigate the influence of gender discrimination on microfinance outreach to women and to test the moderating effect of an international founder. Using data on 213 MFIs from 65 countries, the results show that gender discrimination negatively impacts microfinance outreach to women, but that the negative effect is mitigated by having an international founder. These findings are discussed, and several avenues are opened for future research.     

The Question of Sustainability for Microfinance Institutions*

Microentrepreneurs have considerable difficulty accessing capital from mainstream financial institutions. One key reason is that the costs of information about the characteristics and risk levels of borrowers are high. Relationship‐based financing has been promoted as a potential solution to information asymmetry problems in the distribution of credit to small businesses. In this paper, we seek to better understand the implications for providers of “microfinance” in pursuing such a strategy. We discuss relationship‐based financing as practiced by microfinance institutions (MFIs) in the United States, analyze their lending process, and present a model for determining the break‐even price of a microcredit product. Comparing the model’s results with actual prices offered by existing institutions reveals that credit is generally being offered at a range of subsidized rates to microentrepreneurs. This means that MFIs have to raise additional resources from grants or other funds each year to sustain their operations as few are able to survive on the income generated from their lending and related operations. Such subsidization of credit has implications for the long‐term sustainability of institutions serving this market and can help explain why mainstream financial institutions have not directly funded microenterprises. We conclude with a discussion of the role of nonprofit organizations in small business credit markets, the impact of pricing on their potential sustainability and self‐sufficiency, and the implications for strategies to better structure the credit market for microbusinesses.     

Productivity change of microfinance institutions in Kenya: A bootstrap Malmquist approach

This paper uses a DEA (Data Envelopment Analysis) based Malmquist approach to investigate the changes in productivity of 20 Kenyan microfinance institutions (MFIs) over the period 2009–2012. A bootstrap procedure is employed to determine whether the changes in Malmquist index and its components are statistically significant. Results show that MFIs have experienced about 7% annual productivity progress on average, which is mainly attributable to technological advances. A second-stage bootstrapped regression analysis is employed to examine the impact of several environmental variables on productivity change measures. Results show that matured MFIs tend to have a lower productivity compared to their younger counterparts. Results also reveal that higher return-on-assets associates with the productivity gain and technological improvements.     

Technical Change in the Peruvian Regulated Microfinance Sector

This study evaluates and quantifies the technical change in the Peruvian regulated microfinance sector during the period 2003–2015 estimating a translog cost function. We found technical deterioration between 2005 and 2015 due to the differentiated effects that the technical innovations, implemented by the MFIs, had on their production costs. In the analysis by groups of MFIs, all groups converged at a technical deterioration rate between 8.6 and 9.13% in the last year. Problems in the implementation, execution, and/or management of the new technologies as well as the difficulty in achieving reductions in the variable costs may explain these results.     

Microfinance Performance and Social Capital: A Cross-Country Analysis

In recent years, the microfinance industry has received a substantial amount of cross-border funding from both public and private sources. This funding reflects the increasing interest in microfinance as part of a more general trend towards socially responsible investments. In order to be able to secure sustained interest from these investors, it is important that the microfinance industry can show evidence of its contribution to reducing poverty at the bottom of the pyramid. For this, it is crucial to understand under what conditions microfinance institutions (MFIs) are able to reduce poverty. This paper contributes to this discussion by investigating the relationship between the extent to which social capital formation is facilitated within different societies and the financial and social performance of MFIs. This focus on social capital formation is important, because in many cases MFIs use group loans with joint liability to incentivize asset-poor borrowers to substitute the lack of physical collateral by their social capital. Hence, the success of a large part of the loan relationship between MFIs and their borrowers depends on the social capital those borrowers can bring into the contract. We carry out a cross-country analysis on a dataset containing 100 countries and identify different social dimensions as proxies for how easy social capital can be developed in different countries. We hypothesize that microfinance is more successful, both in terms of their financial and social aims, in societies that are more conducive to the development of social capital. Our empirical results support our hypothesis.     

Institutionalizing Ethics in Institutional Voids: Building Positive Ethical Strength to Serve Women Microfinance Borrowers in Negative Contexts

This study examines whether microfinance institutions (MFIs) that serve women borrowers at the base of the economic pyramid are likely to adopt a written code of positive organizational ethics (POE). Using econometric analysis of operational and economic data of a sample of MFIs from across the world, we find that two contextual factors—poverty level and lack of women’s empowerment—moderate the influence of an MFI’s percentage of women borrowers on the probability of the MFI having a POE code. MFIs that serve more women borrowers are more likely to adopt a POE code, especially in negative contexts (where women borrowers face poverty and disempowerment and are therefore susceptible to abuse). This study provides evidence that MFIs can build positive ethical strength in negative contexts.     

Institutional framework and capital structure of microfinance institutions

This article addresses the question of whether institutional frameworks matter in the capital structure of microfinance institutions. We studied a sample of 292 MFIs between 2004 and 2009. Our findings suggest that creditor rights, a country's legal tradition, and the level of financial sector development are significantly related to MFIs' level of external finance. Furthermore, the positive relationship between banking sector development and borrowings enables us to conclude that the microfinance sector and the formal banking sector are complementary. In addition, a split sample technique is used in order to assess the external validity of the model. Findings from this cross-validation strengthen the results obtained from the whole sample and indicate that our model seems to predict well the effect of institutional variables on the capital structure of MFIs.     

Currency risk and microcredit interest rates

Foreign currency debt provides additional access to capital and offers funds in favorable and flexible terms to microfinance institutions (MFIs). Yet, we find that the use of foreign currency debt, on average, leads to higher microcredit interest rates. We also find that MFIs operating in countries with pegged exchange rate regimes and profit MFIs are better able to mitigate foreign currency risk. The results of the paper suggest that local currency debt is a better option for MFIs if the goal is to provide microcredit at lower interest rates.     

Symbiotic Marketing and Trust-Related Issues: Empirical Evidence From an Emerging Economy

ABSTRACT

Adopting a perspective of social capital theory, we study the effect of market orientation on the stability of symbiotic alliances in an emerging economy. Focusing on a subset of the alliances, namely symbiotic marketing alliances, the results reveal that firms’ market orientation has a positive effect on social capital, which, in turn, has a positive effect of the stability of the symbiotic marketing alliances. Moreover, social capital also has a positive effect on the sharing of resources among the partners, which should also influence the stability of the alliance. This report concludes with a discussion of the implications for academic researchers and practitioners.     

How does the global microfinance industry determine its targeting strategy across cultures with differing gender values?

In this paper we empirically investigate the role of culture in determining the gender-targeting strategy of microfinance institutions (MFIs). We use female/male grammatical distinctions in language as the manifestation of culturally-inherited gender values. Our findings indicate that grammatical gender distinctions have a significant effect on the targeting strategy of MFIs. Specifically, MFIs target women in cultures where they are most likely to experience financial discrimination. This suggests that MFIs adapt to disparate discriminatory cultures in a way that serves their core mission of outreaching financially-excluded women, particularly where such strategy is most needed.     

Microcredit: an answer to the gender problem in funding?

Microfinance institutions (MFIs) target people excluded from the traditional banking system. By providing start-up capital to these under-financed individuals, they enable a greater number of women to start their own business, particularly in sectors where initial capital requirements are high. Our study follows a portfolio of 3,640 microcredit applicants in France over the 2000–2006 time period, identifying MFI client profiles and bringing to light gender differences in borrowers compared to a wider sample of entrepreneurs. This study shows that the male–female gap found amongst company creators is also maintained amongst the clienteles of MFIs. Empirical results also suggest that gender is a decisive factor regarding the amount of credit provided to borrowers when comparing with other factors in the borrower and firm profile. Thus to a certain extent, MFIs are found to reinforce gender inequalities in France.     

文化创意企业智力资本对企业绩效影响的实证分析

运用 VAIC法对文化创意企业的智力资本进行测量,基于平衡计分卡的思想构建文化创意企业绩效评价指标体系,运用主因子赋权和分析法计算文化创意企业绩效,并以文化创意企业绩效作为因变量,以文化创意企业智力资本作为自变量,构建线性回归模型对文化创意企业智力资本对企业绩效的影响进行实证分析。分析结果表明：智力资本对文化创意企业绩效的影响作用已经大于物质资本,是企业绩效的主要驱动因素;智力资本的构成要素人力资本和结构资本对文化企业绩效发挥的作用程度有所不同,结构资本对企业绩效发挥了积极的促进作用,人力资本影响作用不大;文化创意企业各类资本之间具有相关性。     

The influence of the CEO’s business education on the performance of hybrid organizations: the case of the global microfinance industry

Microfinance institutions (MFIs) are typical examples of hybrid organisations, meaning organisations pursuing both a financial and social logic. This study examines the question of whether financial and social performance improves when an MFI’s chief executive officer (CEO) has a business education. We apply the random effects instrumental variable regression method to examine the influence of the CEO’s business education on the MFI’s financial and social performance. Our panel dataset that includes 353 MFIs from across the globe indicates that ‘only’ 55% of the MFIs have a CEO with a business education. The empirical results indicate that MFIs with CEOs who have a business education perform significantly better, financially and socially, than MFIs managed by CEOs with other types of educational backgrounds. The findings suggest that CEOs with a business education seem better at managing the much-debated tradeoff between providing small loans and producing healthy financial results.     

The Gambler,the Carrots,and the Cook: A Critical Evaluation of Investment Potential in the Vietnamese Software Industry

The Vietnamese software industry has shown substantial development in recent years. On the basis of interviews with informed respondents this article investigates the condition and potential for further development of the industry, using a soft systems approach. Finegold's eco-system model is used to build a model of the industry. Partnerships and networks are identified as important factors in industry evolution, with the key role played by venture capital. Furthermore, the Vietnamese government and its institutions will continue to have a significant influence on the industry.     

Tariffs,capital mobility,and foreign ownership

This paper is concerned with the welfare effects of a small capital movement from one country to another followed by the repatriation of that capital's marginal product. Although this issue has been addressed previously, especially from the point of view of the host country, there seems to exist no formal analysis which treats simultaneously the interdependent welfare effects on the investing and host countries and thus on world real income. The purpose of this paper is to develop such an analysis in order to determine the conditions under which a capital flow will help or harm a country.     

企业智力资本内在价值形成与特征的理论分析

企业智力资本是一个创造价值的系统。其内在价值是在智力资本各要素相互作用下,通过多种方式给企业带来未来现金流而形成。智力资本使用中不减值、多人在不同地方可同时使用、边际报酬递增使智力资本价值剧增。     

微型金融机构可持续发展能力的国际比较

微型金融作为一种有效的扶贫方式和金融服务手段在全球范围内快速发展。然而,微型金融的实践面临的一个主要挑战是如何在“扶贫”和“可持续发展”之间维持平衡。从可持续发展的经济含义出发,建立微型金融机构可持续发展能力评价指标体系,运用层次分析法,利用2000-2012年14个国家的财务和社会绩效数据,计算各国微型金融机构可持续发展能力得分。结果显示,我国微型金融机构可持续发展能力较弱。由此,从利率市场化、资金来源多元化、金融产品的多样化等几个方面提出了提高我国微型金融机构可持续发展能力的政策建议。