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The Effects of Religion on Development Efforts: Evidence from the Microfinance Industry and a Research Agenda

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  • Mersland, Roy
  • D’Espallier, Bert
  • Supphellen, Magne

Abstract

This study responds to the need for more empirical knowledge pertaining to the effect of religion on development efforts. We use data from the microfinance industry to study performance differences between Christian and secular Microfinance Institutions (MFIs). We find that Christian MFIs have significantly lower funding costs and consistently underperform in terms of financial profit indicators. Contrary to our hypotheses Christian MFIs are as efficient in assuring loan repayment and their average loan sizes are on par with those of their secular peers.

Suggested Citation

  • Mersland, Roy & D’Espallier, Bert & Supphellen, Magne, 2013. "The Effects of Religion on Development Efforts: Evidence from the Microfinance Industry and a Research Agenda," World Development, Elsevier, vol. 41(C), pages 145-156.
    • Handle: RePEc:eee:wdevel:v:41:y:2013:i:c:p:145-156
    DOI: 10.1016/j.worlddev.2012.05.030
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    References listed on IDEAS

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    9. Koch, Dirk-Jan & Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2009. "Keeping a Low Profile: What Determines the Allocation of Aid by Non-Governmental Organizations?," World Development, Elsevier, vol. 37(5), pages 902-918, May.
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    Cited by:

    1. Luminita Postelnicu & Niels Hermes, 2018. "Microfinance Performance and Social Capital: A Cross-Country Analysis," Journal of Business Ethics, Springer, vol. 153(2), pages 427-445, December.
    2. Simon Cornée & Panu Kalmi & Ariane Szafarz, 2020. "The Business Model of Social Banks," Kyklos, Wiley Blackwell, vol. 73(2), pages 196-226, May.
    3. R. Casselman & Linda Sama & Abraham Stefanidis, 2015. "Differential Social Performance of Religiously-Affiliated Microfinance Institutions (MFIs) in Base of Pyramid (BoP) Markets," Journal of Business Ethics, Springer, vol. 132(3), pages 539-552, December.
    4. Michael Delgado & Christopher Parmeter & Valentina Hartarska & Roy Mersland, 2015. "Should all microfinance institutions mobilize microsavings? Evidence from economies of scope," Empirical Economics, Springer, vol. 48(1), pages 193-225, February.
    5. Ahmad, Syedah & Lensink, Robert & Mueller, Annika, 2020. "The double bottom line of microfinance: A global comparison between conventional and Islamic microfinance," World Development, Elsevier, vol. 136(C).
    6. Adithya Kiran Kolloju & Michele Meoli, 2022. "Efficiencies of Faith and Secular Microfinance Institutions in Regions of Asia, Africa, and Latin America: A Two-Stage Dual Efficiency Bootstrap DEA Approach," Economies, MDPI, vol. 10(3), pages 1-12, March.
    7. Mersland, Roy & Nyarko, Samuel Anokye & Sirisena, Amila Buddhika, 2020. "A hybrid approach to international market selection: The case of impact investing organizations," International Business Review, Elsevier, vol. 29(1).
    8. D. Pascal & R. Mersland & N. Mori, 2017. "The influence of the CEO’s business education on the performance of hybrid organizations: the case of the global microfinance industry," Small Business Economics, Springer, vol. 49(2), pages 339-354, August.
    9. Chmelíková, Gabriela & Krauss, Annette & Dvouletý, Ondřej, 2019. "Performance of microfinance institutions in Europe—Does social capital matter?," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
    10. Fan, Yaoyao & John, Kose & Liu, Frank Hong & Tamanni, Luqyan, 2019. "Security design, incentives, and Islamic microfinance: Cross country evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 62(C), pages 264-280.
    11. Morvant-Roux, Solène & Guérin, Isabelle & Roesch, Marc & Moisseron, Jean-Yves, 2014. "Adding Value to Randomization with Qualitative Analysis: The Case of Microcredit in Rural Morocco," World Development, Elsevier, vol. 56(C), pages 302-312.
    12. Shahid Razzaque, 2019. "Choice of Microfinance Contracts and Repayment Rates under Individual Lending: An Artefactual Field Experiment from Pakistan," PIDE-Working Papers 2019:166, Pakistan Institute of Development Economics.
    13. Godfroid, Cécile & Otiti, Naome & Mersland, Roy, 2022. "Employee tenure and staff performance: The case of a social enterprise," Journal of Business Research, Elsevier, vol. 139(C), pages 457-467.
    14. Katarzyna Burzynska & Olle Berggren, 2015. "The Impact of Social Beliefs on Microfinance Performance," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(7), pages 1074-1097, October.
    15. Leif Atle Beisland & Bert D’Espallier & Roy Mersland, 2019. "The Commercialization of the Microfinance Industry: Is There a ‘Personal Mission Drift’ Among Credit Officers?," Journal of Business Ethics, Springer, vol. 158(1), pages 119-134, August.
    16. Al-Azzam, Moh’d & Mimouni, Karim, 2016. "Is exchange rate risk priced in microfinance?," Research in International Business and Finance, Elsevier, vol. 36(C), pages 520-531.
    17. Nyarko, Samuel Anokye, 2022. "Gender discrimination and lending to women: The moderating effect of an international founder," International Business Review, Elsevier, vol. 31(4).
    18. Niels Hermes & Marek Hudon, 2018. "Determinants Of The Performance Of Microfinance Institutions: A Systematic Review," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1483-1513, December.
    19. Barry, Thierno Amadou & Tacneng, Ruth, 2014. "The Impact of Governance and Institutional Quality on MFI Outreach and Financial Performance in Sub-Saharan Africa," World Development, Elsevier, vol. 58(C), pages 1-20.
    20. Ampofo, Akwasi & Mabefam, Matthew Gmalifo, 2021. "Religiosity and Energy Poverty: Empirical evidence across countries," Energy Economics, Elsevier, vol. 102(C).
    21. Emmanuel Amissah & Katarzyna Świerczyńska, 2021. "Is Religion a Determinant of Financial Development?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 27(3), pages 233-247, August.
    22. Smith, Amy Erica, 2017. "Democratic Talk in Church: Religion and Political Socialization in the Context of Urban Inequality," World Development, Elsevier, vol. 99(C), pages 441-451.
    23. Hermes, Cornelis & Hudon, M., 2018. "Determinants of the Performance of Microfinance Institutions: A Systematic Review," Research Report 2018008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    24. Yogeeswari Subramaniam & Tajul Ariffin Masron & Mastura A. Wahab & Md Aslam Mia, 2021. "The impact of microfinance on poverty and income inequality in developing countries," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(1), pages 36-48, May.

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