Resumo

Microfinance disseminates financial services to the poor through a set of varied microfinance institutions (MFIs). Some MFIs have experienced bankruptcy or failed to achieve financial sustainability, surviving thanks to the subsidies from various national and international donors. Other MFIs have favoured financial performance to the detriment of their social mission.

We test five assumptions with respect to the controversial conclusions from literature. Similarly, we choose the variables according to the literature upon the determinants of financial and social performance with respect to CMFIs and IMFIs .We use two variables for the measurement of financial performance of MFIs: return on assets (ROA) and operation self-sustainability (OSS).Both ratios are available from the MIX; they are positively and very significantly correlated.

Islamic MFIs differ from conventional MFIs with respect to funding resources, financial services, default risk management and the targeted clienteleFunding resources for CMFIs mainly come from foreign donors, government and the Central Bank; they vary according to their stage of development. At their start, they receive large subsidies.

Our data come mainly from the Microfinance Information Exchange database (MIX) and, in addition, recent reports on the social performance of MFIs (SPS) developed by the MIX, are sometimes supplemented by annual reports specific to MFIs.The sample consists in an unbalanced panel of 67 MFIs in 10 countries from the MENA region over the period 2008-2019. MFIs from Sudan and Iran, wherein the financial system is entirely Islamic were excluded to avoid sampling bias. More than two thirds of MFIs are NGOs and over a quarter consists in IMFIs; these are specific departments (Window).

The estimate of financial performance in equation 1 compares CMFIs to IMFIs (See first two columns in Table 4 below). However, a few variables prove insignificant. A breakdown of the overall sample into sub-samples, specifically Islamic MFIs into the two categories of Sole business and Window IMFIs, may explain non-significance and enables to compare IMFIs with CMFIs (See last two columns in Table 4).

Sole business IMFIs differ from CMFIs and Window IMFIs by their specialization in Islamic microfinance: Targeting the poorest affects to a lesser extent their economic sustainability; there is a higher impact of staff productivity; granting group loans and operating in rural areas increase their social outreach. However, hypotheses related to social performance are not verified. Admittedly, our subsample is small (18 IMFIs) and is overweighed by the number of Sole business IMFIs from Yemen.

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