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on Microfinance |
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Issue of 2025–08–11
two papers chosen by Guadalupe Acra Ticona and Marco Novarese, Università degli Studi del Piemonte Orientale |
| By: | Hermes, Niels; Hudon, Marek; Moahid, Masaood (University of Groningen) |
| Abstract: | Microfinance regulation plays a crucial role in ensuring financial stability and client protection, yet their influence on Microfinance Institutions (MFIs) remains a topic of contention. Using Artificial Intelligence (AI) in the screening stage, this Systematic Literature Review (SLR) incorporates both quantitative and qualitative articles, offering a comprehensive analysis of the effects of regulatory measures on the performance of MFIs. Overall, we find that while microfinance regulation initially may hinder the financial and social performance of MFIs, in thelong run its stabilizing effects reverse the adverse effects through the self-correcting loop, which eventually support MFIs to systematic growth. Our study calls for an optimal level of regulation that increases the compatibility of the financial, social, and stability goals of microfinance. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:gro:rugfeb:2024010-eef |
| By: | Hermes, Niels; Hudon, Marek; Moahid, Masaood (University of Groningen) |
| Abstract: | In recent years, there has been a notable shift towards embracing innovative microfinance products. Yet, what do we know about the impact of these innovations on clients, MFIs, and their associated challenges? This systematic literature review (SLR) analyzes 105 articles to analyze the effects of so-called disruptive and incremental innovation in microfinance products. The findings reveal that these innovations elicit diverse outcomes for clients and MFIs, albeit through different pathways. Although the results are mixed, this SLR emphasizes the potential of these innovations to deepen the effects of microfinance. The study highlights a symmetry between the two types of innovations. Disruptive innovations prioritize the financial empowerment of clients, whereas incremental innovations focus more on socioeconomic development. Moreover, implementing innovative products enhances the financial and social performance of MFIs.Intriguingly, incremental innovation may reintroduce information asymmetry problems. Disruptive innovation raises concerns about client protection and exclusion of the most unprivileged, among other aspects. The analysis emphasizes that MFIs may use these innovations to maximize benefits for their clients while maintaining sustainable financial returns. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:gro:rugfeb:2024011-eef |