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- Convenors:
-
Asad Ghalib
(Liverpool Hope University)
Fariya Hashmat (Lahore School of Economics)
Syeda Ayesha Subhani (Lahore School of Economics. Kashf Foundation)
Ahmad Nawaz (Lahore School of Economics)
Rukhsana Kausar (University of Westminster)
Issam Malki (University of Westminster)
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- Formats:
- Papers Mixed
- Stream:
- Business, finance and digital technologies
- Sessions:
- Tuesday 29 June, -
Time zone: Europe/London
Short Abstract:
Amidst longstanding debates on the pros and cons of microfinance as a tool for poverty reduction and empowerment, the pandemic has had a profound effect on MF institutions in developing countries. This panel evaluates the socio-economic impact that the pandemic has had on MFIs and beneficiaries.
Long Abstract:
The outbreak of the pandemic, however, resulted in a significant effect on microfinance institutions and their beneficiaries all across the world. Research has shown that more than two-thirds of the borrowers have had their livelihoods to be either completely shut down or severely impacted in one form or other by the pandemic.
Given the significant impact that COVID19 is producing, this panel invites empirical contributions that focus on aspects such as:
- How are beneficiaries impacted across various social and economic dimensions? We will be looking forward to contributions that capture short and long-term impact across both rural and urban areas.
- How do microfinance institutions respond to the pandemic? What sort of safety mechanisms do they put in place for their clients, if any? Were these sufficient and sustained? We welcome perspectives from practitioners and academics.
- A number of state-led initiatives across the world offer safety nets through cash and non-cash transfer programmes. We welcome contributions that carry out empirical assessments of how, and to what extent such interventions aid borrowers in sustaining their microenterprises.
- To what extent has the pandemic introduced new forms of governance and new political regimes in the management of microfinance?
We welcome contributions that look critically at the role of the various MFIs across the globe.
Accepted papers:
Session 1 Tuesday 29 June, 2021, -Paper short abstract:
The study explores the effect that the income diversification strategy of microfinance institutions has on their profitability. The findings show that income diversification inhibits profitability. Other explanatory variables drive profits. Implications for a post-COVID-19 context is well discussed.
Paper long abstract:
This study explores the effect of income diversification on the profitability of microfinance institutions (MFIs) in Ghana. The study uses a pooled cross-sectional quarterly data covering 2016 to 2018 on MFIs in Ghana and regression analysis. The results indicate that the MFIs record low profits and they are generally not so much diversified. Income diversification has a negative effect on return on asset and return on equity, suggesting the preference for a focused strategy. Larger firms are found to be more profitable although there is an inverted U-shaped nexus. Investments in fixed assets are beneficial for enhancing performance among the firms while the findings cast doubt on the extent of financial intermediation. This is because cash and investments in government securities are more than 50 percent of assets while loan levels are scant as compared to deposits. The study calls for MFIs to resort to providing more loans as this will enhance their bottom-line, improve economic activities and drive economic growth. The insights from the study lend credence to the relevance of data-driven decision making among MFIs. This study extends the diversification-performance literature in the context of MFIs in emerging markets.
Paper long abstract:
COVID-19 AND MICROFINANCE INSTITUTIONS IN NIGERIA.
BODUNDE C. OLAYEMI
Edo University Iyamho, Uzuaire, Edo State. Nigeria.
Department of Accounting
Email:olayemi.bod@gmail.com
Abstract
This study seeks to examine the impact of COVID-19 Pandemic on microfinance institutions in Nigeria. Microfinance institutions provide a wide range of financial services such as savings, loans, payment services, money transfers etc. (CBN, 2013). Its importance is that, it provides much needed financial services to the poor and low income households (Teeboon 2019).
Since microfinance loans are expected to be repaid by borrowers in order to sustain the lending capacity of Microfinance institutions, the study seeks to examine the following research questions: How did COVID-19 pandemic affects the ability of microfinance institutions to give out loans in Nigeria? How did COVID-19 pandemic affects the ability of borrowers to repay their loans in Nigeria? Lastly, what is the impact of COVID-19 pandemic on the financial status of microfinance institutions in Nigeria?.
The study employs multiple regression analysis given that the data are cross-sectional and time series in nature. Secondary data will be extracted from the annual financial reports of different microfinance institutions from the period of 2010-2020. While primary data will be collected through interviews with selected managers and customers of microfinance institutions.
The outcome of this study will reveal the effect of pandemic such as COVID-19 on the performance of microfinance institutions and how the negative effects can be prevented in the future.
Paper short abstract:
This study investigates the effect of the COVID-19-induced decline in economic activities on the financial and social efficiency of microfinance institutions (MFIs). We find that the pandemic-induced impact decreases the financial efficiency of MFIs.
Paper long abstract:
“The global economy could suffer between $5.8 trillion and $8.8 trillion in losses – equivalent to 6.4%–9.7% of global gross domestic product (GDP) – as a result of the novel coronavirus disease (COVID-19) pandemic” estimated by the Asian Development Bank (ADB), May 2020.
The COVID-19 was first identified in China in December 2019, but the virus has spread rapidly across the globe. As of May 20, 2020, the number of confirmed coronavirus infections worldwide approached 5 million across more than 200 countries and territories, with over 90% of reported cases currently located outside China. The ongoing COVID-19 pandemic not only represents a worldwide public health emergency, but also has imposed massive and far-reaching economic cost globally. The spread of the virus itself and the containment measures attempting to mitigate it can bring production and consumption to a standstill. For example, high mortality and morbidity rates of COVID-19 reduce the labour supply which, in turn, hinders production. In a similar vein, social distancing policies and lockdown measures (e.g., store and factory closures, quarantine, and mobility limitations) aiming to reduce the transmission rate and curb the spread of the disease, may also result in a sharp and immediate decline of production in the economy. Moreover, when workers lose their income due to the mass layoffs, they tend to cut back on spending or reduce their ‘postpone-able’ social consumption (e.g., restaurants, movie theatres, pubs and clubs, travel and tourism). Firms may also delay their investments owing to heightened uncertainty associated with COVID-19.
Paper short abstract:
This paper presents findings from research conducted in Pakistan with microfinance users to examine the impact of Covid 19 on low income households, especially women. Furthermore, it presents evidence based strategies taken by MFIs to help low-income households cope with Covid 19 stresses.
Paper long abstract:
Covid 19 has impacted low-income households, especially women, disproportionately as a result of systemic factors that increase women's vulnerabilities to shocks and hazards. Globally, the recession resulting from Covid 19 has been named a 'she-cession'. In Pakistan, the impact of the recession has further been compounded by rising food inflation which also impacts low-income households more as they spend a greater proportion of their income on food related expenses. Kashf Foundation, Pakistan's premier women centric microfinance institution, has undertaken a series of surveys with its clients on the impact of the Covid linked recession and rising food prices. Findings from these researches, that have been analyzed using statistical techniques, are presented in this paper. The paper further highlights the actions taken by microfinance institutions globally, and Kashf Foundation in particular, to empower their clients to better cope with the effects of the recession caused by Covid 19 lockdowns.