Do microfinance institutions benefit from integrating financial and nonfinancial services?

27% of MFIs adopt a ‘plus’ model and provide nonfinancial services alongside financial services. Is the pendulum shifting from a ‘minimalistic’ microfinance model back to an ‘integrated’ model?

In the 1970ties and 80s, the provision of financial services to microentrepreneurs was often done alongside nonfinancial services (social and business development services). While social services focused on improving clients’ welfare, business development services were offered to teach the clients basic financial and business management principles. This was believed to enhance clients’ business success and in that way, improve the MFI’s loan quality. This belief was not supported by earlier studies and most MFIs have phased out the ’plus’ practice and now specialize in providing only financial services. In contrast, recent studies have hinted that credit alone is not enough to significantly enhance client’s welfare. Thus, in our dataset, 27% of the MFIs adopt a ‘plus’ model. The purpose of our most recent article published in Applied Economics is to provide policymakers and practitioners with evidence on whether the provision of ‘plus’ services influences the financial and social performance of MFIs. We find that the provision of nonfinancial services does not harm nor improve MFIs’ financial sustainability and efficiency. The results, however, suggest that the provision of social services is associated with improved loan quality and greater depth of outreach. You can download and read the full article here


For the first time, a special track on “Microfinance” will be included at The Financial Management Association (FMA) conference taking place 13-15 June 2018 in Kristiansand, Norway. If you have a high-quality research paper fitting a finance audience and you would like to apply, please submit it. Deadline for submission is December 1st. More about the conference here


In collaboration with others guest editors, we will edit a special issue on the “Internationalization of Social Enterprises” to be published in Journal of World Business. JWB is a top-ranked journal (level 4 at the ABS list). For this special issue, we would be accepting submissions related to the internationalization of Microfinance. Submission deadline is 31st of January 2018. Read the full call for papers and submission guidelines  here

 New webpage and newsletter:

CERSEM launched today its new webpage and its new name. By changing our name from the Norwegian Centre for Microfinance Research (NOCMIR) to Center for Research on Social Enterprises and Microfinance (CERSEM), we want to emphasize that our research is global in nature. Moreover, we want to demonstrate that our research includes not only a ‘narrow’ microfinance perspective but also a wider social enterprise perspective. After all, Microfinance Institutions are typical examples of social enterprises working with both a financial and a social logic. Together with the new webpage, CERSEM has also launched its newsletter which will be sent to several thousand contacts. The newsletter will be short and only sent out when we have new publications or other major events to announce. We hope you will enjoy both the webpage and the newsletter.

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New publication from CERSEM in Journal of Business Ethics:

What causes social enterprises in general, and microfinance institutions in particular, to sometimes drift away from their social objectives? This is a much debated issue and observers usually identify the pressure from capital providers and weak governance structures as the main reasons for such ‘mission drift’. In this new publication, we identify a possible additional explanation by asking the question: “May mission drift be caused by the credit officers?”

Read the publication here