Internet reporting in microfinance institutions

Abstract

Purpose -This paper aims to present research on how and why microfinance institutions (MFIs) disclose financial and social information on the internet. Legitimacy theory provides the theoretical framework. Design/methodology/approach -The empirical study analysed factors influencing MFIs to publish financial and social information on the internet. The model was tested using regression analysis. The sample consisted of publicly available data from the web sites of 273 MFIs. Findings -The study found that MFIs' internet presence overall is scarce and that greater levels of disclosure are needed. It was found that large MFIs with a high degree of public exposure on the internet disclose greater amounts of information on their web sites than smaller MFIs with a low degree of public exposure. It was also found that for-profit MFIs disclose more financial information on their web sites, while non-profit non-governmental organisations (NGOs) reveal more social information. Practical implications -MFIs should be proud to tell the world what they are doing. MFI managers need to remember that transparency increases funds from donors. Donors are mostly based in developed countries, so the internet plays a key role in disclosure and attracting potential donors. Thus, managers of MFIs are encouraged to increase disclosure levels -especially on the internet. Originality/value -Academic research into the factors that influence MFIs' internet disclosure is still scarce. This is an important area of study because full disclosure offers enormous benefits. Since MFIs have a social mission, they are legitimated in the eyes of their donors by disclosing social information. Since they are also financial institutions, they have to show that they use the funds they receive efficiently.

Size and culture as determinants of the web policy of listed firms: The case of web accessibility in Western European countries

“…The same pattern is observed for the specific case of information and communication technologies (ICT; see, e.g., Lee & Xia, 2006; Premuroso & Bhattacharya, 2008; Ramamurthy, Sen, & Sinha, 2008). Moreover, there is previous evidence that size has a positive effect on the quantity and quality of web disclosure (see, e.g., Bonsón, Escobar, & Flores, 2006; Gutiérrez, Fuertes, & Serrano, 2008, among others).…”

A meta-analysis examining the nature of trade-offs in microfinance

“…Additionally, understanding how trade-offs differ across information disclosure practices as called for by Gutiérrez-Nieto et al (2008) could be of interest, perhaps by analyzing performance trade-offs through a segmentation of the Mix Market database by diamond rating.…”

“…However, Gutiérrez-Nieto et al (2008) employ legitimacy theory to examine the influences of MFI information disclosure. The authors find that MFIs generally have low levels of disclosure for both financial and social performance, although for-profit MFIs generally disclose more financial information while NGOs disclose more social indicators.…”

Social and Financial Efficiency of Microfinance Institutions

“…Mersland and Strøm (2009) affirm that "the third-party and standardised collected MFI data must be judged better than self-reported data, as found for instance in the Mixmarket database". In one previous study (Gutiérrez-Nieto et al 2008) we found that large MFIs with a high degree of Internet public exposure disclose greater amounts of information on the Internet than smaller and less visible MFIs. We also found that for-profit MFIs disclose more financial information on the Internet, while MFI NGOs reveal more social information.…”