Lending to women in microfinance: Role of social trust

Aggarwal, Raj; Goodell, John W.; Selleck, Lauren

doi:10.1016/j.ibusrev.2014.05.008

Cited by 116 publications

(116 citation statements)

References 49 publications

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“…With respect to our dependent variables, the descriptive statistics show that the MFIs in our sample mainly lend to women: two-thirds of the loans is provided to female borrowers. This supports the idea that the general approach taken by MFIs is to focus their lending on women as they are considered to perform better in terms of repayment, while at the same time making a greater social impact (Aggarwal et al 2015). The size of the average loan provided by an MFI in a particular country is two-thirds the size of the average GNI per capita of that country.…”

Section: Descriptive Statisticssupporting

confidence: 68%

“…The results suggest that social capital does affect MFI performance and that there is a trade-off between financial and social performance. Aggarwal et al (2015) focus on analyzing whether social dimensions (i.e., trust and culture) influence the extent to which MFIs lend to female borrowers. They find that in low-trust countries MFIs lend more to women as compared to MFIs in high-trust countries.…”

Section: Social Capital and The Performance Of Mfismentioning

confidence: 99%

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Microfinance Performance and Social Capital: A Cross-Country Analysis

Postelnicu

Hermes

2016

J Bus Ethics

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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.

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Section: Descriptive Statisticssupporting

confidence: 68%

Section: Social Capital and The Performance Of Mfismentioning

confidence: 99%

Microfinance Performance and Social Capital: A Cross-Country Analysis

Postelnicu

Hermes

2016

J Bus Ethics

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“…Alternatively, women empowerment can also be considered as an indicator of social performance (Copestake, 2007). Women are generally perceived to be more trustworthy (Aggarwal, Goodell, & Selleck, 2015) and generate greater social impact (Croson & Buchan, 1999;Maclean, 2010). Moreover, women borrowers have a greater tendency to repay uncollateralized microloans (Aggarwal et al, 2015;D'Espallier, Guerin, & Mersland, 2011).…”

Section: Social and Financial Performancementioning

confidence: 99%

“…Women are generally perceived to be more trustworthy (Aggarwal, Goodell, & Selleck, 2015) and generate greater social impact (Croson & Buchan, 1999;Maclean, 2010). Moreover, women borrowers have a greater tendency to repay uncollateralized microloans (Aggarwal et al, 2015;D'Espallier, Guerin, & Mersland, 2011). Therefore, women empowerment, proxied by the proportion of women borrowers in an MFIs' portfolio, can help improve MFI financial performance.…”

Section: Social and Financial Performancementioning

confidence: 99%

How does microfinance prosper? An analysis of environmental, social, and governance context

Tanin

Mobin²,

et al. 2019

Sustainable Development

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The spotlight of this study is to examine whether environmental, social, and governance performance affects the financial performance of microfinance institutions (MFIs). The topic has been of much interest to researchers and policymakers due to increased awareness among stakeholders on the adverse social and environmental impacts of business actions. Using a dataset covering 5 years for 62 MFIs across 34 countries, we find that environmental and governance performance has no impact on the financial performance of MFIs. As for the social–financial performance nexus, our results reveal a positive relationship using the depth of outreach as proxy of social performance. However, when women empowerment is used as a proxy for social performance, evidence suggest presence of negative relationship. The study contributes to the literature by providing new evidence on the relationship between environmental, social, and governance and financial performance from microfinance industry. Our results are robust to a variety of econometric specifications and have significant policy implications for donors, investors, MFIs, and regulators.

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“…A more fine-grained analysis of each umbrella theme yielded the following subthemes. Micro-level investigations of businesses' developmental role can be broken down into the role of microfinance in enabling business development by fostering the internationalization of micro-enterprises (Mersland, Randoy, & Strom, 2011) and supporting women borrowers (Aggarwal, Goodell, & Selleck, 2015), with other studies detailing the performance, profitability, and mission drift of microfinance institutions (Bruton, Khavul, & Chavez, 2011;Im & Sun, 2015;Serrano-Cinca & Gutierrez-Nieto, 2014). Further studies deal with building markets for the poor through the creation of inclusive markets (Acosta, Kim, Melzer, Mendoza, & Thelen, 2011) and strategies aimed at addressing poverty (Alvarez, Barney, & Newman, 2015;Si et al, 2015).…”

Section: Business Models and Entrepreneurship In Developing Marketsmentioning

confidence: 99%

An overview of social responsibility dimensions in international business

Sinkovics¹,

Sinkovics²,

Archie-Acheampong³

2019

Socially Responsible International Business

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This chapter aims at taking stock of business-responsibility-related studies in international business (IB) research. Key features of this literature review include (1) a broad search strategy capturing both positive and negative aspects of responsibility, (2) not imposing any constraints on the time period, and (3) extending the search to all IB journals included in the Web of Science database. By incorporating both responsible and irresponsible behavior in the search strategy, we are able to provide a holistic map of responsibility-related research in IB.

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Lending to women in microfinance: Role of social trust

Cited by 116 publications

References 49 publications

Microfinance Performance and Social Capital: A Cross-Country Analysis

Microfinance Performance and Social Capital: A Cross-Country Analysis

How does microfinance prosper? An analysis of environmental, social, and governance context

An overview of social responsibility dimensions in international business

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