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Why do microfinance institutions fail socially? A global empirical examination

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  • Dorfleitner, Gregor
  • Priberny, Christopher
  • Röhe, Michaela

Abstract

We empirically study social failures of microfinance institutions (MFIs). Besides various measures for the financial performance and outreach, we consider the relationship between several institutional variables and social failure. Regarding the relationship with the financial performance, we identify MFIs with good portfolio quality as being less prone to social failure. Also, MFIs with better measures for the quality of outreach appear to be less likely to fail socially. Finally, MFIs with a higher fraction of donations and regulated institutions exhibit a lower probability of social failure, while fast growing MFIs appear to show a positive correlation.

Suggested Citation

  • Dorfleitner, Gregor & Priberny, Christopher & Röhe, Michaela, 2017. "Why do microfinance institutions fail socially? A global empirical examination," Finance Research Letters, Elsevier, vol. 22(C), pages 81-89.
  • Handle: RePEc:eee:finlet:v:22:y:2017:i:c:p:81-89
    DOI: 10.1016/j.frl.2016.12.027
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    Cited by:

    1. Zamore, Stephen, 2018. "Should microfinance institutions diversify or focus? A global analysis," Research in International Business and Finance, Elsevier, vol. 46(C), pages 105-119.

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    More about this item

    Keywords

    Microfinance; Microcredit; MFI social failure; Regulation; Gender; Risk;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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