Social versus Financial Return in Microfinance
17 Pages Posted: 20 Mar 2015
Date Written: March 1, 2015
In this paper we examine the interaction between social and financial returns in microfinance. Running multivariate regression models and using 1,508 observations on microfinance institutions between 2004 and 2010, we find strong evidence suggesting that institutions with more social engagement in terms of outreach to the poor earn higher portfolio yields. We also find that some measures of outreach are associated with increased operating expenses. As return figures are influenced by both costs and yield, and both increase with depth of outreach, these two contradictory results lead to a zero sum effect on return measures.
Keywords: microfinance, financial return, outreach, operating expenses, portfolio yield
JEL Classification: G21, L11, O16
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