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Giving and Receiving: Faith and the Sustainability of Institutions Providing Microfinance Services for Development

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  • Stephen Morse

    (Centre for Environment and Sustainability (CES), University of Surrey, Guildford, Surrey GU2 7XH, UK)

Abstract

Topic: This review explores the important issue of the ‘institutional sustainability’ (IS) of faith-based development organizations (FBDOs) providing microfinance services to the poor in the developing world. IS has often been equated with the financial self-reliance of microfinance service providers, with income from credit charged on loans as well as other fees being used to pay for the service. While the approaches and tensions inherent in the attainment of IS by microfinance providers seeking to help the poorest in society have been well explored in the literature, there has been no specific analysis of FBDO providers and the special challenges they may face. Methodology: This paper is based on a review of the literature using a combination of search terms such as ‘microfinance’, ‘development’, ‘institutional sustainability’, ‘financial self-reliance’ and ‘faith’, with a special emphasis on the literature published between the 1990s and 2023. Results: One of the main findings is that Christian and Hindu FBDOs providing microfinance largely follow the financial self-reliance conceptualization of IS applied by secular providers and apply much the same set of responses regarding the setting of interest rates and other charges and the management of repayment amongst their client base. However, FBDOs of the Islamic faith take a broader perspective on IS and include the need for spirituality and religious development amongst their clients. Future directions: This paper makes a number of suggestions for future research, including (1) the reasons why religious development and spirituality do not appear to be strong issues for Christian and Hindu FBDOs relative to their Islamic counterparts; (2) the potential for inter-faith collaboration between FBDOs and secular providers, between FBDOs of different faiths as well as FBDOs from versions of the same faith (e.g., Protestant and Catholic); and (3) whether FBDOs are more naturally predisposed and able to engage and collaborate with the informal microfinance sector than secular microfinance providers.

Suggested Citation

  • Stephen Morse, 2024. "Giving and Receiving: Faith and the Sustainability of Institutions Providing Microfinance Services for Development," Sustainability, MDPI, vol. 16(5), pages 1-23, February.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:5:p:1923-:d:1346440
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    References listed on IDEAS

    as
    1. Elijah Bitange Ndemo, 2006. "Assessing sustainability of faith-based enterprises in Kenya," International Journal of Social Economics, Emerald Group Publishing, vol. 33(5/6), pages 446-462, May.
    2. Umawadee Detthamrong & Lan Thi Nguyen & Wirapong Chansanam, 2023. "Leadership and Group Management: Key Success Factors for Microfinance Institutions in Chaiyaphum Province, Thailand," Sustainability, MDPI, vol. 15(14), pages 1-20, July.
    3. Widiarto, Indra & Emrouznejad, Ali, 2015. "Social and financial efficiency of Islamic microfinance institutions: A Data Envelopment Analysis application," Socio-Economic Planning Sciences, Elsevier, vol. 50(C), pages 1-17.
    4. Susan Davis & Vinod Khosla, 2007. "The Architecture of Audacity: Assessing the Impact of the Microcredit Summit Campaign," Innovations: Technology, Governance, Globalization, MIT Press, vol. 2(1-2), pages 159-180, April.
    5. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
    6. Abhijit Banerjee & Esther Duflo & Rachel Glennerster & Cynthia Kinnan, 2015. "The Miracle of Microfinance? Evidence from a Randomized Evaluation," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 22-53, January.
    7. Lynn Bennett & Carlos E. Cuevas, 1996. "Sustainable banking with the poor," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(2), pages 145-152.
    8. Alderman, Harold, 1996. "Saving and economic shocks in rural Pakistan," Journal of Development Economics, Elsevier, vol. 51(2), pages 343-365, December.
    9. Ahmad Nawaz, 2010. "Performance of Microfinance: The Role of Subsidies," Working Papers CEB 10-008.RS, ULB -- Universite Libre de Bruxelles.
    10. So Young Sohn & Yonghan Ju, 2023. "Mission Efficiency Analysis of For-Profit Microfinance Institutions with Categorical Output Variables," Sustainability, MDPI, vol. 15(3), pages 1-12, February.
    11. Elijah Bitange Ndemo, 2006. "Assessing sustainability of faith‐based enterprises in Kenya," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 33(5/6), pages 446-462, May.
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