This dissertation examines the potential trade-off between financial performance and social impact of social business ventures, particularly focusing on the “flagships” of social businesses to fight poverty: Microfinance Institutions (MFIs). With the commercialization of the sector, the innovative idea of microfinance has increasingly attracted criticism in literature. Hence, this thesis investigates the previous research in that area and analyses one MFI in particular: KazMicroFinance (KMF) in Kazakhstan. The qualitative analysis is motivated by the following key research question: Do the financial performance and social impact of KMF affect each other? It was hypothesized, that an increased financial performance of the institution affects the social impact negatively. The data for the analysis primarily derive from financial statements and annual reports of KMF. Based on this data, financial and social indicators of KMF were computed and observed for an assessment period of 2005-2015. Findings of this dissertation support the hypothesis. Though KMF is an institution repeatedly rewarded for its social impact and is one of the “best performing” MFIs globally, the analysis reveals, among others, that KMF distributes high dividend payments to shareholders, charges excessive interest rates of over 40% on average to its clients and makes serious changes in its borrowers’ structure, which in literature are associated with less inclusion of the poor. Therefore, this dissertation concludes that KMF’s operations are profit-driven and it is not purely a social business venture. KMF experienced mission drift and its financial performance impacts the social outreach negatively.
Date of Award | 13 Jul 2017 |
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Original language | English |
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Awarding Institution | - Universidade Católica Portuguesa
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Supervisor | Susana Frazão Ferreira Fernandes Pinheiro (Supervisor) |
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- Mestrado em Gestão e Administração de Empresas
Social business ventures : he potential trade-off between financial performance and social impact of Microfinance Institutions (MFIs) : a critical analysis of the MFI KazMicroFinance (KMF) in Kazakhstan
Iris, R. (Student). 13 Jul 2017
Student thesis: Master's Thesis