Management Control for Microfinance: An Examination of the Belief System of A Malaysian Microfinance Provider

Abstract

This paper examines how the belief system of a bank that provides microfinance services influences formal and informal control mechanisms and consequently shapes decisions and the strategic direction of microfinancing in Malaysia. Using institutional logics perspective as our theoretical lens, we conducted a case study in a Malaysian developmental financial institution (DFI) responsible for providing microfinancing. The results suggest that it is difficult to achieve a balance between economic and social considerations when the banking belief system is strongly rooted in the overall banking practices. This paper highlights the dominance of the banking logic over the social logic as reflected in the DFI's management control system. Specifically, it demonstrates how its belief system underpins its microfinance activities due to a focus on risk-return considerations, which aim to minimise non-performing loans and maximise commercial profits. This consequently affects clients who have obtained microfinance products and services. This paper also demonstrates how the hiring carriers of social logic do not appear to infuse the organisation with social logic, due to the vague and compartmentalised structure of the microfinance segment and a lack of long-term social goals in both external and internal monitoring systems.

Credit Risk Assessment Models of Retail Microfinancing: The Case of a Malaysian National Savings Bank’s Branch

“…The above question should enable this study to identify good model characteristics, or what might be termed as "best practice" in assessing the risk to predict default in repaying loans associated with microfinance. Microfinance, as opposed to conventional financial service in general, is a retail financial service that is offered to individuals or firms associated with relatively small income (Siti-Nabiha, Azhar, Isa, & Siti-Nazariah, 2018a;Siti-Nabiha, Azhar, & Ali-Mokhtar, 2018b;Siti-Nazariah, Siti-Nabiha, & Azhar, 2016).…”

“…It attempts to justify that the use of financial information alone is insufficient to predict default. Instead, it argues that non-financial information should complement the financial information (Siti-Nabiha et al, 2018a;Siti-Nabiha et al, 2018b;Siti-Nazariah et al, 2016), particularly in the credit assessment of microfinancing to predict default. In analysing this credit assessment, the paper has examined microfinance borrowers who have enrolled into its microfinance offerings.…”

Combining the Concept of Green Accounting With the Regulation of Prohibition of Disposable Plastic Use

“…The company not only conveys financial information to existing investors and creditors and potential investors or corporate creditors, but also needs to pay attention to the social interests in which the company operates (Han et al, 2018). Thus, the company's responsibility is not only to investors or to creditors (Adinehzadeh et al, 2018;Siti-Nabiha et al, 2018), but also to other stakeholders, for example employees, consumers, suppliers, governments, communities, media, industry organizations and other interest groups. Social and environmental responsibility are in the corridors of financial accounting (Deegan, 2013).…”

Attitude Of Technology And Their Impact On Interest Of Internet Banking

“…Internet banking opens new paradigms, structures, and strategies for retail banks, where banks face new opportunities and challenges. Internet banking benefits both customers and banks (Fenu & Pau, 2015;Siti-Nabiha et al, 2018). For customers, internet banking offers convenience and speed in conducting banking transactions.…”

“…The focus of this research is on how the intensity of customer behavior in using internet banking services. The perception of consumers will benefit, and convenience arising from the use of internet banking will determine the attitude of the customers in the use of internet banking services (Ishengoma, 2011;Siti-Nabiha et al, 2018). Customers' attitudes in accepting internet banking can be shown by the intention to use internet banking services.…”