How Culture Influences Social and Financial Performance of Microbanks: Evidence from an Empirical Study

Conference on Ethics and Sustainable Development, (pp. 5-9). Kaohsiung, Taiwan, 2019

9 Pages Posted: 23 Dec 2019

See all articles by Mohammad Zainuddin

Mohammad Zainuddin

Australian National University (ANU)

Ida Md. Yasin

Putra Business School, Universiti Putra Malaysia

Date Written: November 2019

Abstract

Despite micro-finance's deep embeddedness in cultural contexts, research on the influence of culture on the performance of micro-finance institutions (MFIs) is rather sparse. As micro-finance industry increasingly diversifies across geographical borders, it is important to understand how national culture where MFIs are located affects their social and financial performance. This study investigates the role of national cultural dimensions on MFI social outreach to women and financial sustainability. Hofstede’s four dimensions of national culture are used: power distance, uncertainty avoidance, individualism and masculinity. Two econometric models are tested based on data of 1,186 micro-finance firms from 42 countries over a period of 12 years. The results offer empirical evidence that national culture exerts significant influence on MFI performance. The findings are of relevance to policymakers and practitioners and help provide a better understanding of the appropriate micro-lending policies in a particular cultural context.

Keywords: micro-finance institutions, national culture, Hofstede dimensions, firm performance, social outreach, women borrowers, financial sustainability

Suggested Citation

Zainuddin, Mohammad and Yasin, Ida Md., How Culture Influences Social and Financial Performance of Microbanks: Evidence from an Empirical Study (November 2019). Conference on Ethics and Sustainable Development, (pp. 5-9). Kaohsiung, Taiwan, 2019, Available at SSRN: https://ssrn.com/abstract=3495529

Mohammad Zainuddin (Contact Author)

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

Ida Md. Yasin

Putra Business School, Universiti Putra Malaysia

43400 UPM Serdang
Selangor
Malaysia

HOME PAGE: http://putrabusinessschool.edu.my

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