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Microfinance and Sustainable Development
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Microfinance and Sustainable Development

A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Economic and Business Aspects of Sustainability".

Deadline for manuscript submissions: closed (30 April 2020) | Viewed by 39371

Special Issue Editors

Prof. Dr. María Jesús Muñoz-Torres

E-Mail Website
Guest Editor
Department of Finance and Accounting, Law and Economics Faculty, Jaume I University, Campus del Riu Sec 12071, Castellón, Spain
Interests: sustainable development; business economics; financial economics and microfinance; agricultural economics; risk management; corporate finance; economics and philosophy
Special Issues, Collections and Topics in MDPI journals
Dr. Icíar García Pérez

E-Mail Website
Guest Editor
Department of Finance and Accounting, Law and Economics Faculty, Jaume I University, Campus del Riu Sec 12071, Castellón, Spain
Interests: microfinance; sustainable development; sustainable finance

Special Issue Information

Dear Colleagues,

This Special Issue will comprise a selection of papers addressing different approaches and tools for the in-depth analysis of the relationship between the microfinance phenomenon and sustainable development, with a special focus on assessment methodologies. The microfinance sector is considered an important contributor to the expansion of formal financial systems. It also should play a significant role in promoting greater sustainable development. Consequently, the objective of this Special Issue is to examine the microfinance phenomenon and institutions from a comprehensive approach, which includes the financial, environmental, social, and governance dimensions (FESG) of sustainability. This Special Issue will comprise a selection of papers addressing, among others, concerns linked to: (i) microfinance institutions and transparency; (ii) environmental impact of microfinance; (iii) social impact of microfinance; (iv) governance mechanisms in microfinance institutions; (v) microfinance and social cohesion; (vi) gender and microfinance; (vii) poverty alleviation and microfinance; and (viii) holistic approaches to microfinance institution assessment. The aim of the research papers in this volume is to promote an integrative approach to foster sustainable management policies and practices in the microfinance industry. Papers selected for this Special Issue are subject to a rigorous peer review procedure with the aim of rapid and wide dissemination of research results, developments, and applications.

Prof. María Jesús Muñoz-Torres
Dr. Icíar García Pérez
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • microfinance
  • sustainable development
  • financial, environmental, social and governance assessment
  • sustainable finance
  • impact evaluation
  • sustainable performance

Published Papers (6 papers)

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Research

18 pages, 276 KiB  
Article
Capital Structure, Financial Performance, and Sustainability of Micro-Finance Institutions (MFIs) in Bangladesh
by Syeda Sonia Parvin, Belayet Hossain, Muhammad Mohiuddin and Qingfeng Cao
Sustainability 2020, 12(15), 6222; https://doi.org/10.3390/su12156222 - 02 Aug 2020
Cited by 25 | Viewed by 6953
Abstract
Capital structure plays an important role in organizational performance. Sources of funds for micro-finance institutions (MFIs) and their performance and financial sustainability become an important topic for the MFIs and poverty alleviation initiatives to achieve sustainable development goals of the UN. We explored [...] Read more.
Capital structure plays an important role in organizational performance. Sources of funds for micro-finance institutions (MFIs) and their performance and financial sustainability become an important topic for the MFIs and poverty alleviation initiatives to achieve sustainable development goals of the UN. We explored the following question: Does the financial structure in terms of financial leverage affect the financial performance: Financial sustainability, depth, and breadth of outreach of MFIs? Our research focuses on studying the relationship between capital structure and financial performance of micro-finance institutions as well as achieving the objectives of this program by reaching out to the deserving clients without collaterals. A dataset of 187 MFIs is used to establish the relationship between the capital structure and performance of MFIs. Panel data regression analysis has been used for this study using the Random effect and Fixed effect models. Return on Asset (ROA), and Net Income to Expenditure (NIER) have been used as measures of financial performance. The findings indicate that Equity to Asset Ratio (EAR), Debt to Loan Ratio (DTL), Risk, and Size are the factors that influence NIER. Furthermore, EAR, and DTL have a positive effect on ROA, and Risk has a negative effect. The findings of this study will enable MFIs to configure their capital structure by creating a portfolio of sources of their capital from market-based sources of funds that can maximize their financial performance and reach out to poor clients without collaterals. Full article
(This article belongs to the Special Issue Microfinance and Sustainable Development)
18 pages, 279 KiB  
Article
The Nexus between Credit Channels and Farm Household Vulnerability to Poverty: Evidence from Rural China
by Hong Sun, Xiaohong Li and Wenjing Li
Sustainability 2020, 12(7), 3019; https://doi.org/10.3390/su12073019 - 09 Apr 2020
Cited by 19 | Viewed by 2755
Abstract
It is well known that finance is at the core of economic activities, and rural finance is an important force for agricultural development, rural economic growth, and farmer income growth, but how rural credit affects vulnerability to poverty of farm households is not [...] Read more.
It is well known that finance is at the core of economic activities, and rural finance is an important force for agricultural development, rural economic growth, and farmer income growth, but how rural credit affects vulnerability to poverty of farm households is not yet known. The study on the nexus between the credit channels and vulnerability to poverty can not only realize targeted poverty alleviation but also promote sustainable rural development. This study measures vulnerability to poverty of Chinese farm households by three-stage feasible generalized least squares (FGLS) and tests for the impact of two credit channels on farm household’s vulnerability to poverty based on China Household Finance Survey data. We mainly found that the proportion of structural poverty in western areas is comparatively large, and risky poverty of farm households in eastern areas is relatively serious. The high education cost may be an important factor in farm household poverty; the cost-effectiveness of education is higher than that of earnings. Farm household vulnerability to poverty with folk loans is 0.2% higher than that of farm households without private credit; however, this is not significant. Farm household vulnerability to poverty with bank credit is 0.4% lower than households without bank credit, which is significant. For farm households who have a higher level of vulnerability to poverty, the effect of bank credit on reducing vulnerability to poverty is greater. Moreover, we replaced the vulnerability-to-poverty variable with a more rigid indicator to test the relationship between the credit channels and vulnerability to poverty and got the same results as before. Full article
(This article belongs to the Special Issue Microfinance and Sustainable Development)
23 pages, 2056 KiB  
Article
Microfinance Institutions Fostering Sustainable Development by Region
by Icíar García-Pérez, María Ángeles Fernández-Izquierdo and María Jesús Muñoz-Torres
Sustainability 2020, 12(7), 2682; https://doi.org/10.3390/su12072682 - 29 Mar 2020
Cited by 21 | Viewed by 6925
Abstract
In the last few years, considerable attention has been paid to microfinance as a relevant participant in the formal financial system, whose target audience is people who are otherwise at risk of financial exclusion. In parallel, sustainability and the promotion of Sustainable Development [...] Read more.
In the last few years, considerable attention has been paid to microfinance as a relevant participant in the formal financial system, whose target audience is people who are otherwise at risk of financial exclusion. In parallel, sustainability and the promotion of Sustainable Development (SD) are imposed as the theoretical frame when facing any study. This, connected with cultural and organizational dimensions theories, are the analytical framework for the analysis of the relationship between the context of performance in which Microfinance Institutions (MFIs) operate and their activity in promoting sustainability. A holistic approach is necessary to make operational these concepts; for that reason, financial, environmental, social and governance dimensions (FESG), and the balance among them, have to be considered. The main objective of the paper is to explore to what extent MFIs are fostering SD, and how this promotion is performed by region. For the analysis, two different sources of information have been studied: sectoral academic literature that focuses on the different sustainability dimensions, and MIX Market sustainability data obtained from the MFIs. A keyword analysis of the selected papers has been executed to be conscious of the most investigated aspects by region; on the data provided by the institutions, a Kruskal-Wallis H test has been performed to learn what the main Sustainability Indicators (SIs) are that are reported affirmatively. To obtain comprehensive research, a comparative study of the results offers the convergences, divergences and gaps of information in each of the regions. The findings show significant differences depending on the region, and confirm that operationalization should be adjusted at the regional context of the MFIs. The paper, with the inherent limitations due to data quality, also offers recommendations for the better promotion of sustainability in each of the regions. Full article
(This article belongs to the Special Issue Microfinance and Sustainable Development)
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19 pages, 597 KiB  
Article
Sustainable Empowerment Initiatives among Rural Women through Microcredit Borrowings in Bangladesh
by Jesmin Akhter and Kun Cheng
Sustainability 2020, 12(6), 2275; https://doi.org/10.3390/su12062275 - 14 Mar 2020
Cited by 33 | Viewed by 9481
Abstract
Microcredit is an effective instrument that has been recognized to alleviate poverty, especially in developing countries such as Bangladesh. This study seeks to use microcredit as an instrument to bridge the gap between the accessibility of microcredit among poor rural women and sustainable [...] Read more.
Microcredit is an effective instrument that has been recognized to alleviate poverty, especially in developing countries such as Bangladesh. This study seeks to use microcredit as an instrument to bridge the gap between the accessibility of microcredit among poor rural women and sustainable socio-economic development, providing novelty to the concept of “sustainability of empowerment”. In addition, this study employed poor rural women to estimate the empowerment performance of microcredit borrowers compared to non-borrowers in the same socio-economic environment as it relates to microcredit in rural Bangladesh. A regression analysis was used to accomplish these objectives. This study also used propensity score matching techniques to find an easy way to access microcredit. The empirical results not only involve participation in microcredit accessibility but also the particular qualitative attributes of women empowerment. The results also suggest that sustainability is accompanied by affluence among microcredit borrowers, as indicated by women empowerment. The outcome of the empirical analysis shows that there is a significant impact of microcredit on increasing participation in the overall decision-making process, in legal awareness, independent movements, and mobility, as well as enhancing living standards to encourage sustainable women empowerment. This study recommends future investigations for microcredit providers to explore how to build an integrated, holistic approach to women empowerment in Bangladesh. Full article
(This article belongs to the Special Issue Microfinance and Sustainable Development)
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17 pages, 501 KiB  
Article
Determinants of Repayment among Male and Female Microcredit Clients in the USA. An Approach Based on Managers’ Perceptions
by Emilio M. Santandreu, Joaquín López Pascual and Salvador Cruz Rambaud
Sustainability 2020, 12(5), 1701; https://doi.org/10.3390/su12051701 - 25 Feb 2020
Cited by 7 | Viewed by 2793
Abstract
Research on microfinance institutions (MFIs) has normally been focused on developing and emerging markets. However, an analysis of developed countries is also important for foreign MFIs wishing to take advantage of the growth potential of those markets. Therefore, the aim of this article [...] Read more.
Research on microfinance institutions (MFIs) has normally been focused on developing and emerging markets. However, an analysis of developed countries is also important for foreign MFIs wishing to take advantage of the growth potential of those markets. Therefore, the aim of this article is to determine whether MFIs working in the USA’s market should change or adapt their microcredit policies with respect to women. In effect, there are no studies in the USA supporting the argument that women are a better risk of microcredit than men, or that there are differences in microcredit repayment behavior between women and men. Additionally, it was investigated if the payment behavior of women and men is related to variables such as their age, ethnicity, academic level, marital status, or the characteristics of the microcredits, like purposes, amounts, and payment terms. In the USA, there are not—as in other countries—strong incentives, motivations, or external pressures, other than those that men also have, which influence women to pay their microloans better than men. Then, domestic and international MFIs attracted to enter the USA’s market should review their microcredit policies in relation to women. More research is needed about the microfinance market in the USA. Full article
(This article belongs to the Special Issue Microfinance and Sustainable Development)
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25 pages, 2525 KiB  
Article
Challenges and Prospects of Sustaining Donor-Funded Projects in Rural Cameroon
by Gregory Nguh Muluh, Jude Ndzifon Kimengsi and Ngwa Kester Azibo
Sustainability 2019, 11(24), 6990; https://doi.org/10.3390/su11246990 - 07 Dec 2019
Cited by 10 | Viewed by 6668
Abstract
For more than five decades, developing countries (including Cameroon) have been primary beneficiaries of donor-funded projects targeting many sectors, including agriculture and rural development. Cameroon’s rural landscape witnessed a series of project interventions which emphasized sustainability. Although research efforts have been directed towards [...] Read more.
For more than five decades, developing countries (including Cameroon) have been primary beneficiaries of donor-funded projects targeting many sectors, including agriculture and rural development. Cameroon’s rural landscape witnessed a series of project interventions which emphasized sustainability. Although research efforts have been directed towards understanding the planning, implementation and impacts of donor-funded projects, not enough scientific information exists on the determinants, challenges and prospects of sustaining donor-funded projects in rural communities in Cameroon. For this study, the Investment Fund for Communal and Agricultural Micro-projects (FIMAC I) scheme, was used to diagnose the determinants, challenges and prospects for sustaining development projects in the North West Region (NWR) of Cameroon. A representative sample of 150 beneficiaries drawn from 20 farming groups in the NWR was conducted, to generate data which was complemented by interviews. The binary logistic regression results reveal the following: Although there is a significant change in the level of incomes for the FIMAC I project beneficiaries, its sustainability (mirrored through continuity) is dependent upon a myriad of socio-economic factors including family size, length of stay in the community, gender, education and the status of the beneficiary. Furthermore, the less transparent loan application process and the lack of collateral security were the main challenges faced by project beneficiaries. We argue that the introduction of soft loans with minimal demands for collateral security could increase beneficiary participation in projects, while beneficiary groups should further diversify their sources of capital and productive activities. The study does not only contribute to existing theoretical constructs on sustainable rural development, but also makes a succinct request for future studies to unbundle the conditions, under which donor-funded projects are rendered sustainable in rural contexts. Full article
(This article belongs to the Special Issue Microfinance and Sustainable Development)
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