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| Type | Conference or Workshop Paper |
| Scope | Discipline-based scholarship |
| Published in Proceedings | Yes |
| Title | SOCIAL VERSUS FINANCIAL RETURN OF INVESTMENTS IN MICROFINANCE |
| Organization Unit | |
| Authors |
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| Presentation Type | paper |
| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published electronically before print/final form (Epub ahead of print) |
| Language |
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| Event Title | Third European Research Conference on Microfinance |
| Event Type | conference |
| Event Location | Kristiansand |
| Event Start Date | June 10 - 2013 |
| Event End Date | June 12 - 2013 |
| Place of Publication | Zurich, Switzerland |
| Abstract Text | Besides financial return, microfinance investments feature a social return component, traditionally measured as outreach to the poor. I find strong evidence in this research that institutions with more social engagement in terms of outreach earn higher portfolio yields resulting in higher interest rates paid to funders and investors. On the other hand, similar to the findings of previous research studies, particular measures of higher outreach to the poor are associated with increased operating expenses. These two contradictory results lead to a zero sum effect on return measures (such as return on assets, return on equity and operational self-sufficiency). Previous studies therefore seem not to have focused on the best choice of variables. Return figures are influenced by both costs and yield at the same time (controversially), both increasing with higher depth of outreach. The result that investor’s profits are not erased by social factors reemphasizes the importance of the consideration of outreach measures when analyzing microfinance investments. The focus on social factors besides financial measures is essential to ensure the future responsibility of the microfinance industry. |
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