| 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. |