05.07.2010

The Social Performance of MFIs in rural Bangladesh

Research objectives

Theoretical background and key concepts

Conceptual framework of the research

Main challenges

Methodology and research tools

05.07.2010The Social Performance of MFIs in rural Bangladesh

o Main purpose of the study : To identify organizational structures and systems which enhance

the social performance of MFIs.

o The research objectives are:1- To examine the livelihoods assets and strategies of rural people in

Bangladesh.

2- To understand people’s perceptions towards microfinance andMFIs (from both client and non-client perspectives).

3- To identify the organisational structures and systems associatedwith social performance in a specific rural context.

4- To use empirical findings to promote improved systems andstructures for MFIs to achieve better social performance.

05.07.2010The Social Performance of MFIs in rural Bangladesh

The concept of social performance is largely grounded in thenotion of social responsibility in the business sector (Prior andArgandona 2009).

In microfinance, social performance evaluations determinewhether the structures and systems, products and servicesoffered by MFIs are in line with their social objectives Simanowitz2001; IFAD 2006).

It is “the effective translation of an institution’s social goals intopractice in line with accepted social values” (Woller 2004; CGAP2007:3).

The Social Performance of Microfinance

(Source: CGAP, 2007)

05.07.2010The Social Performance of MFIs in rural Bangladesh

Reflects intrinsic limitations entailed by the mainstream top-downconceptualisation of microfinance in development (Conlin andStirrat, 2008).

Whilst microfinance orthodoxy intends to reconcile market forceswith poverty reduction outcomes, current approaches to socialperformance lack sensitivity with regard to the livelihoods of poorpeople and their socio-economic context (Rankin and Shakya2007).

Such conceptualizations might misinform the ways in whichmicrofinance structures and systems interact with borrowers andhinder achievements of social objectives.

05.07.2010The Social Performance of MFIs in rural Bangladesh

The conceptual framework combines a livelihood frameworkwith a stakeholder approach to generate:

An in-depth study of people’s livelihoods

A bottom-up lens on microfinance

A holistic analysis of contextual issues and interactions betweenMFIs and people in rural settings

05.07.2010The Social Performance of MFIs in rural Bangladesh

05.07.2010The Social Performance of MFIs in rural Bangladesh

Source: (Carney 1999)

05.07.2010The Social Performance of MFIs in rural Bangladesh

PC FC

HCHSC

VSC NC

o Horizontal Social CapitalRelationships among communitymembers and whose qualitymight evolve from trust andsolidarity to suspicion and fear.

o Vertical Social CapitalMFI/borrower relationshipsentailing bilateral trust or forms ofdependency and authority(Rutherford 2001:189; Dowla 2006;Narayan 2007)

Using perspectives of different groups of stakeholders:

Stakeholder analysis groups and classify stakeholders accordingto their degree of importance and their power of influence onpeople’s livelihoods (Montgomery 1995).

“Primary stakeholders”: target beneficiaries“Secondary stakeholders”: intermediaries in the intervention process“External stakeholders” : other interested parties who main gain or

lose from the intervention

05.07.2010The Social Performance of MFIs in rural Bangladesh

05.07.2010The Social Performance of MFIs in rural Bangladesh

The Bangladeshi poverty context: a world exception in manyregards (Rhyne and Otero 2007)

Growth and structure of the microfinance sector:› 13 percent penetration rate (the most highly penetrated market in the

world (Honohan 2004).› 2003-2008: 23 percent average annual growth rate› Expected to reach 25 percent between 2009 and 2012.

05.07.2010The Social Performance of MFIs in rural Bangladesh

No. of borrowers No. of MFIs on thebasis of borrowers

% of MFIs on the basis ofborrowers

<10,000 521 81,28

> or = 10,000 but < 50,000 92 14,35

> or = 50,000 but < 100,000 15 2,34

> or = 100,000 but <1,000,000 10 1,56

> 1,000,000 3 0,47

Total 641 100.00

05.07.2010The Social Performance of MFIs in rural Bangladesh

A handful of four powerful actors covering 77 percent of the market:

*Data concerning PROSHIKA are from 2007 (Source : MixMarket)

Matrix of Microfinance and related institutions in Bangladesh, 2006

05.07.2010The Social Performance of MFIs in rural Bangladesh

Source: (Hulme and Moore, 2006)

The main methodological challenge: to generate bottom-upinformation from various stakeholders to inform top-down MFIs’systems.

To tackle the different natures of the research objectives, mixedstrategies and mixed-methods for data collection will be used.

Abductive, the first part of the research uses interpretive socialscience to investigate rural livelihood capitals and strategies.

Dedcutive, the second part of the research seeks to identify howMFIs’ social performance can

The methodology: A case study relying on multiple data sourcesand forms. The research will develop our understanding of themutual interactions between rural people and MFIs, and willprovide an argument about the ways in which MFIs could improveSP.

Mixed-methods and data triangulation will be used to negotiate thequality of words and the reliability and precision of numbers.

05.07.2010The Social Performance of MFIs in rural Bangladesh

Tangail District, Madhupur upazila

05.07.2010The Social Performance of MFIs in rural Bangladesh

05.07.2010The Social Performance of MFIs in rural Bangladesh

05.07.2010The Social Performance of MFIs in rural Bangladesh

Thank you for listening

05.07.2010The Social Performance of MFIs in rural Bangladesh

05.07.2010The Social Performance of MFIs in rural Bangladesh

05.07.2010The Social Performance of MFIs in rural Bangladesh