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Title: Commercialization of Microfinance: Is the sector losing its identity by evading its original 'social service' responsibility?
Contributor(s): Khan, Ashfaq A  (author)
Publication Date: 2008
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Fields of Research (FoR) 2008: 150106 Sustainability Accounting and Reporting
150105 Management Accounting
150102 Auditing and Accountability
Socio-Economic Objective (SEO) 2008: 910299 Microeconomics not elsewhere classified
Abstract: The primary mission behind the inception of the microfinance sector was to enable the poor to have access to cheaper financial services because the mainstream financial institutions would not serve them and the alternative sources of finance, such as informal money lenders, would exploit them by charging them exorbitantly high interest rate. With the paradigm shift in the sector during the early 1990s, when the donor community started emphasizing self-sustainability and profitability on the part of microfinance organizations (MFOs), the main focus of these organizations underwent a drastic shift from following a social service objective to chasing profitability in operations. In Laughlin's (1991) terminology this was an internal change in the basic coherence of these organizations, which rendered other organizational elements incompatible with their primary objectives. MFOs could not cope with their dual responsibility of ensuring their operational and financial self-sufficiency as well as serving the poor while keeping their existing organizational structure intact. This case study provides empirical evidence as to the evasion of social responsibility by MFOs after responding to the paradigm shift in the sector.
Publication Type: Journal Article
Source of Publication: Social and Environmental Accountability Journal, 28(2), p. 78-90
Publisher: The Centre of Social and Environmental Accounting Research
Place of Publication: St Andrews, United Kingdom
ISSN: 0969-160X
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
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Appears in Collections:Journal Article
UNE Business School

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