{"title":"Win-win or tradeoff? Investigating the hybridity of impact investing in Cambodia's microfinance industry","authors":"Kyungmin Park, Hannah Jun","doi":"10.1002/jid.3954","DOIUrl":null,"url":null,"abstract":"<p>Impact investing plays a critical role in financing enterprises that have the potential to tackle social problems through business means, particularly in developing countries. However, concerns about over-indebtedness of microfinance institutions have fueled questions regarding potential trade-offs between financial and social efficiency of impact investing and demand further investigation. Using the case of Cambodia's microfinance industry, this paper first examines whether the microfinance industry outperforms from the perspective of both social and financial returns. In addition, as impact investments by Development Finance Institutions (DFIs) form the backbone of the microfinance sector, a related objective is to investigate whether social or financial returns are more important for DFIs when making impact investment decisions. Using Data Envelopment Analysis (DEA) and Tobit regression, our research finds that while Cambodian MFIs excel in financial efficiency, social efficiency is considerably lower. The analysis also finds that DFIs' investments are predominantly driven by financial efficiency rather than an approach that considers both social and financial outcomes. Our analysis suggests the need for enhanced impact measurement frameworks and a reevaluation of DFIs impact investing strategies to ensure a more equitable focus on both financial and social impacts.</p>","PeriodicalId":47986,"journal":{"name":"Journal of International Development","volume":"37 1","pages":"150-171"},"PeriodicalIF":1.7000,"publicationDate":"2024-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1002/jid.3954","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of International Development","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1002/jid.3954","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"DEVELOPMENT STUDIES","Score":null,"Total":0}
引用次数: 0
Abstract
Impact investing plays a critical role in financing enterprises that have the potential to tackle social problems through business means, particularly in developing countries. However, concerns about over-indebtedness of microfinance institutions have fueled questions regarding potential trade-offs between financial and social efficiency of impact investing and demand further investigation. Using the case of Cambodia's microfinance industry, this paper first examines whether the microfinance industry outperforms from the perspective of both social and financial returns. In addition, as impact investments by Development Finance Institutions (DFIs) form the backbone of the microfinance sector, a related objective is to investigate whether social or financial returns are more important for DFIs when making impact investment decisions. Using Data Envelopment Analysis (DEA) and Tobit regression, our research finds that while Cambodian MFIs excel in financial efficiency, social efficiency is considerably lower. The analysis also finds that DFIs' investments are predominantly driven by financial efficiency rather than an approach that considers both social and financial outcomes. Our analysis suggests the need for enhanced impact measurement frameworks and a reevaluation of DFIs impact investing strategies to ensure a more equitable focus on both financial and social impacts.
期刊介绍:
The Journal aims to publish the best research on international development issues in a form that is accessible to practitioners and policy-makers as well as to an academic audience. The main focus is on the social sciences - economics, politics, international relations, sociology and anthropology, as well as development studies - but we also welcome articles that blend the natural and social sciences in addressing the challenges for development. The Journal does not represent any particular school, analytical technique or methodological approach, but aims to publish high quality contributions to ideas, frameworks, policy and practice, including in transitional countries and underdeveloped areas of the Global North as well as the Global South.