MFI's Social Performance Mapping and the Relationship between Financial and Social Performance: Evidences Against the Trade-off Theory

Date Published: 
Sep 2009
Dewez, D. & Neisa, S.

Exploring the relationship between social and financial performance of MFIs

This paper presents findings on social performance and explores the relationship between financial performance and social performance. It is based on the experiences of Inconfin, an organization that evaluates social performance of MFIs.

The paper discusses results of social performance assessment of 64 MFIs using ECHOS, a tool that evaluates MFIs on mission and social vision, outreach, customer service quality, human resources and environment and corporate social responsibility. Findings include:

  • Geographic zones with advanced microfinance sectors display higher scores of social performance;
  • MFIs’' legal status and social performance do not seem to be related;
  • Older MFIs have higher social performance scores;
  • MFIs with high rural coverage have better social performance results;
  • Relationship between social and financial performance is positive.

The paper concludes that there is no trade-off between social and financial performance. However, the authors do recognize that given the relative small size of the data base, this study needs to be validated with more information.