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Differential Social Performance of Religiously-Affiliated Microfinance Institutions (MFIs) in Base of Pyramid (BoP) Markets

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Abstract

As the debate over the value of microfinance institutions (MFIs) intensifies, it remains apparent that microfinance may, at the very least, be considered as one tool in the arsenal of the war against poverty in base of pyramid (BoP) markets. Given the variety of actors in the microfinance arena, stakeholders have placed a relatively new emphasis on performance reporting for MFIs, allowing comparisons and identifications of performance gaps. One result of this scrutiny is an increased importance placed on MFIs’ social performance, with an eye to understanding measures of MFIs’ intent, process, and results in the social realm—in addition to their financial sustainability. While a number of factors may explain differences in social performance, in this paper we take a close look at a particular factor that may have a positive relationship with social performance—that of an MFI’s religious affiliation or religiosity. Using archival data, we derived three sets of randomly paired samples, pairing religious MFIs with non-religious ones, and compared social performance indicators derived from the literature across the samples. We sought to understand whether religiously-affiliated MFIs would, in fact, demonstrate stronger social performance intent, wider social performance reach via service delivery processes, and better social performance outcomes in BoP markets. Statistical analysis provided preliminary evidence that religiously-affiliated MFIs display stronger social performance, suggesting new avenues for future research.

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Notes

  1. It should be noted that Gutiérrez-Nieto et al. (2009) take exception with this measurement, claiming that a better measure would be the average loan balance per borrower divided by the per capita Gross National Income. Nonetheless, the most prominent measure for depth of outreach in the literature is loan size, and allows for better comparisons with other studies.

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Authors and Affiliations

  1. Department of Management, Peter J. Tobin College of Business, St. John’s University, 8000 Utopia Parkway, Queens, NY, 11439, USA

    R. Mitch Casselman, Linda M. Sama & Abraham Stefanidis

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  1. R. Mitch Casselman
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  2. Linda M. Sama
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  3. Abraham Stefanidis
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Correspondence to Linda M. Sama.

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Casselman, R.M., Sama, L.M. & Stefanidis, A. Differential Social Performance of Religiously-Affiliated Microfinance Institutions (MFIs) in Base of Pyramid (BoP) Markets. J Bus Ethics 132, 539–552 (2015). https://doi.org/10.1007/s10551-014-2360-z

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