{"title":"Financial and social sustainability in the European microfinance sector","authors":"","doi":"10.1007/s11187-023-00850-7","DOIUrl":null,"url":null,"abstract":"<h3>Abstract</h3> <p>This paper investigates the balance between social and financial sustainability goals in the European microfinance sector using an original dataset obtained from a survey conducted in 2016–2017 on 159 microfinance institutions (MFIs) operating in 38 European countries. Overall, our results show that MFIs that are more likely to comply with their social sustainability objectives are also doing well financially. The only aspect on which social sustainability does not seem to have a positive effect on financial sustainability is the financing of the poorest through the provision of small-scale loans. A phenomenon that seems peculiar to the European context is that larger MFIs operating in countries with stringent financial regulation tend to show a comparative advantage and better withstand competition from the traditional banking sector. However, a separate issue that deserves attention is the specific regulation on interest rates, which seems to penalize the MFIs operating in countries imposing interest rate caps due to the impossibility to pass on the high unit costs of microlending to borrowers. Our results are robust to alternative measures of financial sustainability and to the use of the Generalized Method of Moments (GMM) and Instrumental Variable (IV) estimation techniques to overcome the problem of endogeneity.</p>","PeriodicalId":21803,"journal":{"name":"Small Business Economics","volume":"35 1","pages":""},"PeriodicalIF":6.5000,"publicationDate":"2024-01-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Small Business Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s11187-023-00850-7","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
This paper investigates the balance between social and financial sustainability goals in the European microfinance sector using an original dataset obtained from a survey conducted in 2016–2017 on 159 microfinance institutions (MFIs) operating in 38 European countries. Overall, our results show that MFIs that are more likely to comply with their social sustainability objectives are also doing well financially. The only aspect on which social sustainability does not seem to have a positive effect on financial sustainability is the financing of the poorest through the provision of small-scale loans. A phenomenon that seems peculiar to the European context is that larger MFIs operating in countries with stringent financial regulation tend to show a comparative advantage and better withstand competition from the traditional banking sector. However, a separate issue that deserves attention is the specific regulation on interest rates, which seems to penalize the MFIs operating in countries imposing interest rate caps due to the impossibility to pass on the high unit costs of microlending to borrowers. Our results are robust to alternative measures of financial sustainability and to the use of the Generalized Method of Moments (GMM) and Instrumental Variable (IV) estimation techniques to overcome the problem of endogeneity.
期刊介绍：
Small Business Economics: An Entrepreneurship Journal (SBEJ) publishes original, rigorous theoretical and empirical research addressing all aspects of entrepreneurship and small business economics, with a special emphasis on the economic and societal relevance of research findings for scholars, practitioners and policy makers.
SBEJ covers a broad scope of topics, ranging from the core themes of the entrepreneurial process and new venture creation to other topics like self-employment, family firms, small and medium-sized enterprises, innovative start-ups, and entrepreneurial finance. SBEJ welcomes scientific studies at different levels of analysis, including individuals (e.g. entrepreneurs'' characteristics and occupational choice), firms (e.g., firms’ life courses and performance, innovation, and global issues like digitization), macro level (e.g., institutions and public policies within local, regional, national and international contexts), as well as cross-level dynamics.
As a leading entrepreneurship journal, SBEJ welcomes cross-disciplinary research.
Officially cited as: Small Bus Econ
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