Does Multiple Borrowing Encourage Microfinance Clients to Claim Greater Social Benefits?

Abstract

Purpose

For many, corporate social responsibility in the context of microfinance means acting ethically and sustainably and in the best interests of clients within financial intermediation activities.  This study goes beyond this type of obligation to examine social benefits (e.g., death benefits) provided by a microfinance institution in addition to microcredit, known as a "credit plus" business model.  Access to these social benefits is likely to be of great benefit to the vulnerable poor and the temptation to be eligible for access, especially in the context of multiple memberships and borrowings from other financial institutions that generate social capital and dissemination of information about the social benefits, is likely to be strong. 

Design/methodology/approach

Using the OLS regression model this study examines whether members of a microfinance institution who are concurrently members of at least one other such institution disproportionately access the social benefits offered by the microfinance institution besides access to microcredit.

Findings

This study finds a significant association between the uptake of incremental social benefits for only members of the institution offering these benefits and not those with borrowings from other microfinance institutions. 

Originality

The contribution of this study lies in its analysis of a substantial, non-identifiable client-level sample from which branch-level aggregates and statistics are computed.  This aggregation is partly a matter of necessity in that although clients can be uniquely identified in the dataset, the loan officers and branch managers who deal with the clients cannot.