Integrations of microfinance and business development services: Empirical evidence on microfinance institutions and clients

This dissertation evaluates the impact of integrating microfinance and nonfinancial services on performance of microfinance institutions (MFIs) and their clients. First, employing a quasi-experimental approach, this thesis examines the impact of combining financial and nonfinancial services (business development and social services) on MFIs’ performance by using a large global panel data set. The result suggests that MFIs providing social services achieve better social performance, albeit at the expense of their financial results.
Second, this thesis uses a randomization control trial to analyze the impact of a gender and business training on business and gender outcomes for female microfinance clients in Vietnam. The dissertation also examines the additional impact of inviting husbands to the training on women’s outcomes. The results show that the training has a positive impact on business and gender knowledge, business practices, business profits and the profit margin among surviving businesses. The training also exhibits limited positive impact on women’s noncognitive, business-related skills. Moreover, the training improves women’s household bargaining power on major expenditure decisions and reduces the levels of physical domestic violence in families for married women. However, we do not find strong additional effects of inviting husbands to join the training.
Finally, the thesis applies a convex time budget experiment to elicit the impact of the business training on time preferences and consumption smoothing. The result suggests that while the business training does not change preferences, it tends to improve the optimality of intertemporal consumption choices by stimulating current consumption at the expense of future consumption.