Effect of Ownership Types on the Social Performance in Microfinance Institutions

Abstract

The purpose of this thesis is to look at the effect of ownership type on the social performance in microfinance institutions (MFIs). First, I look at the theory concerning microfinance institutions, ownership and social performance. Then I will perform three different tests. First a t-test is used, then a probit regression with control variables, and finally a robustness check. I look at how two different ownership types affects six social performance variables. I will focus on nongovernmental organizations (NGOs) and shareholder firms (SHFs). Three of the social performance variables are often used when measuring social performance, and three of them are quite new when measuring social performance. The data contains 478 MFIs from 77 different countries in the period 1996 to 2012. To generate the results, both simple bivariate regression and multivariate regression is applied. The null hypothesis used, states that NGOs are more socially oriented than SHFs. The results from the study show that only the variable percentage of female clients and average loan size is significant in all three tests. This may indicate that NGOs has a higher percentage of female clients and a lower average loan size than SHFs. For the rest of the variables it is not possible to say that there is a significant difference between NGOs and SHFs, this because these variables where not significant in two of three tests. The results show some divergence against paradigms in the industry. However, there are both studies and theory that support these findings.