The promise and peril of microfinance commercialization

Woller, Gary M.

doi:10.3362/0957-1329.2002.042

Cited by 56 publications

(45 citation statements)

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“…The risk of capital divestment is similar to what, in the microfinance industry, is termed "mission drift" (Woller, 2002 COOPs are totally bound to their members, divestment or "mission drift" are a minor concern for them.…”

Section: Npos and Coops Than In Shfsmentioning

confidence: 90%

“…Transformed SHFs have generally been able to increase their outreach considerably (Ledgerwood and White, 2006). However, some observers fear that increased outreach doesn't come without cost and warn about a possible "mission drift" (Woller, 2002). Christen (2001), however, does not give credit to these fears.…”

Section: Ownership Policies and Empirics In The Microfinance Industrymentioning

confidence: 99%

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The Cost of Ownership in Microfinance Organizations

2009

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We compare the ownership-cost of Shareholders Firms (SHFs), Non Profit Organizations (NPOs), and Cooperatives (COOPs) involved in microfinance. A paradoxical situation motivates us: most providers, both historically and today, are NPOs or COOPs, while policy papers advocate SHFs. We lay out a theoretical framework to understand ownership costs in microfinance organizations better. We propose that cost variables related to market contracting favor NPOs and COOPs, whereas most cost variables related to the practice of ownership favor SHFs. We conclude that what best serves the customers is the coexistence of ownership types and call for empirical research to test this theory.32

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Section: Npos and Coops Than In Shfsmentioning

confidence: 90%

Section: Ownership Policies and Empirics In The Microfinance Industrymentioning

confidence: 99%

The Cost of Ownership in Microfinance Organizations

2009

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“…Specifically, some argue that a more profit seeking microfinance industry is better able to serve the poorest members of the community, since their profit motive leads them to be more efficient and more willing to seek out new markets for their loan products (Christen and Drake, 2002;Rhyne 1998). Others argue that a more commercialized microbank will drift away from the poor customer segment (Woller et al 1999;Woller 2002).…”

Section: Discussionmentioning

confidence: 99%

The impact of international influence on microbanks’ performance: A global survey

Mersland

Randøy

Strøm

2011

International Business Review

121

111

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Microbanks serve micro-enterprises and poor people with financial services. This study examines how various aspects of international influence affect microbanks' financial and social performance.Grounded in agency theory and resource based theory, we argue that there are multiple ways that the internationalization of microbanks might affect performance. Specifically, we argue that one can distinguish between four sources of such internationalization effects; international initiator, international directorship, international debt, and international affiliation/networks. This study utilizes data from 379 microbanks in 73 developing countries -assessed between 2001 and 2008. We find that the internationalization of microbanks to a large extend enhances social performance, but does not enhance financial performance.

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“…Despite this enthusiasm for microfinance, a growing number of scholars argue that microfinance has lost its way, deviating from the professed social objective to eradicate, or at least reduce, poverty in favour of a focus on generating profits (Woller, Dunford, & Woodworth 1999;Woller 2002;Lewis 2008). They claim that microfinance does not reach the poorest of the poor (Scully 2004), or that the poorest are deliberately excluded from microfinance programs (Simanowitz 2002).…”

Section: Welfarist Perspectives On Microfinancementioning

confidence: 99%

“…The terminology was initially applied to the microfinance literature by Jonathan Morduch in his influential paper 'Microfinance Schism' (1998) and further developed by Gary Woller and James Brau (Woller, Dunford, & Woodworth 1999;Woller 2002;Brau & Woller 2004).…”

Section: Institutionist Perspectives On Microfinancementioning

confidence: 99%

The Social Construction of the Microfinance Industry: a comparison of donor and recipient perspectives

2012

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Once driven fundamentally by development concerns, most importantly higher incomes for the poor, many scholars increasingly argue that microfinance "success" has become measured against the success of microfinance institutions themselves, gauged by their progress toward achieving financial self-sufficiency; a shift Gary Woller describes as a move from a welfarist to an institutionist model of microfinance. The regularity in which the institutionist position is articulated in most of the published literature in the field of microfinance is cited as evidence that institutionist perspectives have gained ascendancy over welfarist approaches (Woller 1999, p. 1). One key driver of this trend is the institutionist perspective's alignment with the interests of those with capital or in Bateman and Chang's (2009) words Microfinance's "supreme serviceability to the neoliberal/globalisation agenda" (2009, p.1). But to what extent is the ascendancy complete? Given the role of the media in framing public discourse and influencing public opinion, do institutionist or welfarist themes dominate the mass media, particularly in the major donor and recipient countries? This paper presents an analysis of media coverage of microfinance in one key donor country, the United States, and one major recipient country, India. It finds that while there are some differences in subject matter and style, overall both sets of media articles are dominated by business-oriented language, language that aligns with the institutionist view of microfinance. We argue that the microfinance community, in particular development focussed NGOs and agencies, have yet to come to terms with the implications of the emerging hegemony of the neoliberal institutionist world view. They face major and yet unresolved strategic challenges: Do these NGOs and agencies discard the welfarist model? Or can something be retrieved, if so what? Do they compete head on and become more commercialised themselves, or develop new methods and client bases, or do they exit? And what are the implications for academic understandings of the field -through institutionalism and welfarism -and to what extent do they shed light on the logic, or instead help obscure on-the-ground power relations? Given the dominance of institutionist thinking, we argue that welfarist oriented NGOs, agencies and academics must work together quickly and creatively to ensure that what began as a grassroots project to reduce poverty is not abandoned in favour of the pursuit of profit.Microfinance has been one of the fastest growing "industries" of the new millennium, with the sector now containing over 10,000 microfinance institutions (MFIs) with over $60 billion in assets (MacFarquhar 2010). This expansion has stimulated interest from both scholars and the mainstream media. There is a growing volume of academic research which broadly centres on two approaches: an "institutionist perspective" that highlights microfinance as an Cosmopolitan Civil Societies Journal, Vol.4, No.2, 2012 63 innovation in appl...

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The promise and peril of microfinance commercialization

Cited by 56 publications

References 1 publication

The Cost of Ownership in Microfinance Organizations

The Cost of Ownership in Microfinance Organizations

The impact of international influence on microbanks’ performance: A global survey

The Social Construction of the Microfinance Industry: a comparison of donor and recipient perspectives

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