An Empirical Study on Faith-Based
Microfinance as an Alternative Tool of
Poverty Alleviation
PhD Viva-voce Presentation
Na...
The Patna Parish
Thrift and Credit
Cooperative
Limited
Gramin Vikas Vigyan Samiti
Al-Khair Cooperative Credit Society
2
Outline
1. Overview
– Problem
– Contributions & Publications
1. Need for Study
2. Theoretical Underpinning
– Review of Lit...
“The poor and the poorest
have a right to be serviced
AFFORDABLY, APPROPRIATELY
AND ACCESSIBLY.”
4
PhD. Viva-voce : N.Hoda...
1. Overview
- Problem Statement; Objectives
and Scope
- Contributions & Publications
5
PhD. Viva-voce : N.Hoda, November 2...
Problem Statement
To understand the functioning of the faith-
based microfinance and to explore its role as
an alternative...
Study Objectives
1. to understand the shortcomings and issues persisting in the
mainstream model of microfinance
2. to und...
Scope of the Study and its Relevance to the
Management Discipline
 Business involving the poor (Prahalad, 2005)
 Require...
Contributions and Publications
(SSRN/Researchgate/Academia)
1. Hoda, N., and Gupta, S.L. (2015). Faith-based Organizations...
Additional Publications
6. Hoda, N. (2012). Co-operative based Microfinance. Third International
Conference on Institution...
2. Need for Study
11
PhD. Viva-voce : N.Hoda, November 24, 2015
Embracing death Microcredit has been the 
bane of many a farmer. Many have been 
forced to commit suicide. 
https://parisa...
Microfinance Industry
• Approximately 130 million clients (World Bank
2014)
• Outreach – less than 20%
• Growing at a CAGR...
3. Theoretical Underpinnings
14
PhD. Viva-voce : N.Hoda, November 24, 2015
Literature Review
 Extant researches on mainstream
microfinance institutions
 Conceptual framework of faith-based
organi...
16
PhD. Viva-voce : N.Hoda, November 24, 2015
17
PhD. Viva-voce : N.Hoda, November 24, 2015
18
Indian Context
19PhD. Viva-voce : N.Hoda, November 24, 2015
Issues in Mainstream
Microfinance
• Supply-side (Funding; Client needs; Sustainability)
• Demand-side (Product differentia...
Important References
• Adams, D and von Pischke, J. D., 1992. Microenterprise credit programs:
‘deja vu’, World Developmen...
Prize motivation: 
"for his analysis of
consumption, poverty,
and welfare”
- Focus on India
The Sveriges Riksbank Prize in...
Faith-based Organizations
“a faith-based organization is any organization
that derives inspiration and guidance for its
ac...
Influence of faith on FBOs
• Organizational
Characteristics
1. Mission statement
2. Founding
3. Affiliation
4. Controlling...
Faiths and Financial
Transactions
• Principles of lending
• Interest rates
• Wealth accumulation
• Trade
• Charity
25
PhD....
List of Faith-based MFIs
Name Study Faith affiliation Country/ Head Office
Christian Aid Varndell (2005),
Harper et al. (2...
27
Catholic Relief Services Harper , et al. (2007) Islam India/Ranchi
The Holy Cross Social Service
Centre
Harper , et al....
4.Research Methodology
28
PhD. Viva-voce : N.Hoda, November 24, 2015
AIMS-SEEP Framework
 Assessing the Impact of Microenterprise
Services (AIMS) - Small Enterprise Education
and Promotion (...
Research Methodology
• AIMS-SEEP Framework – Matured Clients only
• Two phased study
Phase 1 - Case Study
Phase 2 - Impact...
Phase 1 – Case Study
• Selection of FB-MFIs
• Data gathering -
organization documents,
archival records,
interviews, direc...
Phase 2 – Impact Assessment
Poverty Variables
A. Social Impact
1. Self Confidence
2. Social Status
B. Women Empowerment
3....
Impact Assessment Methodology
• Purposive sampling – 150 from Mainstream and
50 each from the three FB-MFIs – Total 300
• ...
5. Empirical Findings
A. Case Studies
34
Institutional Overview
35
As of 2012 GRAVIS ACCSL PTCCSL
Deposit (in Rupees) NA 2.1 Crores 93.83 Lakhs
Loan Outstanding (i...
Influence of Faith on Organization
36
Factors GRAVIS ACCSL PTSCCL
Mission statement X X
Founding
Affiliation
Controlling B...
37
Factors GRAVIS ACCSL PTSCCL
Religious environment
Program content:
Integration of religious
components
X X X
Expected c...
5. Empirical Findings
B. Impact Assessment
38
PhD. Viva-voce : N.Hoda, November 24, 2015
Gender Distribution
39
Gender Mainstream Faith-based
Male 4(2.67%) 52 (35%)
Female 146(97.33%) 97 (65%)
TOTAL 150(100.00%)...
Occupation of respondents
Occupation Mainstream Faith-based
Service 0(0.00%) 21(14%)
Self-employed 150(100%) 119(80%)
Dail...
Types of self-employment
Type Mainstream Faith-based
Agriculture 7(4.67%) 10(8%)
Small traders 35(23.33%) 60(51%)
Services...
Incidence of borrowing from MFI
42
PhD. Viva-voce : N.Hoda, November 24, 2015
Average Loan amount
43
PhD. Viva-voce : N.Hoda, November 24, 2015
Repayment period
44
PhD. Viva-voce : N.Hoda, November 24, 2015
Loan repayment frequency
45
PhD. Viva-voce : N.Hoda, November 24, 2015
46
Summary of results of hypotheses
testing
PhD. Viva-voce : N.Hoda, November 24, 2015
47
A. HYPOTHESES RELATED TO IMPACT OF THE PROGRAMME
Variables Hypothesis Remark
HA1:improvement in self-confidence Rejecte...
48
B. HYPOTHESES RELATED TO CLIENT SATISFACTION
Variables Hypothesis Remark
HB1: reasonability of interest rate Accepted B...
6. Conclusions & Future
directions
49
Myths broken
• Also a microfinance model – share the same
principles and products
• No discrimination
• Not for women only...
Value Addition by FB-MFIs
• Savings facility
• Customized products
• Interest rates
• Over-indebtedness
• Cultural issues
...
Future directions
• An Appraisal of Financial Sustainability of Faith-based
microfinance institutions;
• Role of faith in ...
Acknowledgements
AcknowledgmentsPhD. Viva-voce : N.Hoda, November 24, 2015
• My Guides – Dr S. L. Gupta and Dr Viqar A. Ba...
?
QuestionsPhD. Viva-voce : N.Hoda, November 24, 2015
54
55
THANK YOU !
of 55

Najmul Hoda PhD Thesis Defence Presentation

An Empirical Study on Faith-based Microfinance as an Alternative Tool of Poverty Alleviation. The doctoral study discussed the role of FBOs in microfinance.
Published on: Mar 3, 2016
Published in: Government & Nonprofit      
Source: www.slideshare.net


Transcripts - Najmul Hoda PhD Thesis Defence Presentation

  • 1. An Empirical Study on Faith-Based Microfinance as an Alternative Tool of Poverty Alleviation PhD Viva-voce Presentation Najmul Hoda Internal Guide : Prof. Dr. S.L.Gupta External Guide : Prof. Dr. Viqar A. Baig PhD. Viva-voce : N.Hoda, November 24, 2015 Department of Management Birla Institute of Technology Mesra 1
  • 2. The Patna Parish Thrift and Credit Cooperative Limited Gramin Vikas Vigyan Samiti Al-Khair Cooperative Credit Society 2
  • 3. Outline 1. Overview – Problem – Contributions & Publications 1. Need for Study 2. Theoretical Underpinning – Review of Literature and the Conceptual Framework 1. Research Methodology 2. Empirical Findings – Case Studies – Survey Results – Poverty Alleviation and Client Satisfaction 1. Conclusions & Future directions3 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 4. “The poor and the poorest have a right to be serviced AFFORDABLY, APPROPRIATELY AND ACCESSIBLY.” 4 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 5. 1. Overview - Problem Statement; Objectives and Scope - Contributions & Publications 5 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 6. Problem Statement To understand the functioning of the faith- based microfinance and to explore its role as an alternative tool of poverty alleviation. 6 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 7. Study Objectives 1. to understand the shortcomings and issues persisting in the mainstream model of microfinance 2. to understand the concept of faith based microfinance and develop the theoretical framework of the study. 3. to understand the functioning; standard operating procedures; and the influence of faith on the faith-based microfinance institutions. 4. to evaluate the performance of the faith based microfinance institution in the poverty alleviation with respect to mainstream microfinance 5. to suggest practical and conceptual suggestions regarding the suitability of faith-based microfinance 7 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 8. Scope of the Study and its Relevance to the Management Discipline  Business involving the poor (Prahalad, 2005)  Requires product innovation  Huge size of market – 2 billion  Sustainable management – Operational, Financial and Social 8 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 9. Contributions and Publications (SSRN/Researchgate/Academia) 1. Hoda, N., and Gupta, S.L. (2015). Faith-based Organizations and Microfinance: A Literature Review, Asian Social Science. Vol. 11 No. 9, (Scopus Indexed) 2. Hoda, N., and Gupta, S.L. (2015). Client Satisfaction in Faith-based Microfinance: A Comparison with Mainstream Models of Microfinance, Journal of Economic Cooperation and Development. Vol. 36 No. 2 (Scopus Indexed) 3. Hoda, N., and Gupta, S.L. (2014). Loan Portfolio of Faith-based Microfinance Institution: An Empirical Analysis, Post Modern Openings, Vol 5 No. 1. (Ebsco Indexed) 4. Hoda, N., and Gupta, S L. (2013). Faith Based Model of Microfinance: A Case Study of Al Khair Cooperative Society. Jharkhand Journal of Development Studies, Vol. 11 No. 1. Xavier Institute of Social Service, Ranchi, India 5. Hoda, N. and Gupta, S L. (2010). Faith Based Model of Microfinance: A Case Study of Al Khair Cooperative Society. International Seminar on Islamic Finance in India. IRTI, IDB Jeddah. KSA 9
  • 10. Additional Publications 6. Hoda, N. (2012). Co-operative based Microfinance. Third International Conference on Institutional and Technological Environment for Microfinance. Burgundy School of Business, Groupe ESC Dijon Bourgogne, France 7. Hoda, N. (2012). Co-operatives as the Key to Responsible Microfinance. Microfinance Focus, an internationally recognized platform for online knowledge platform about microfinance and sustainable development. 8. Hoda, N. (2009). Critical Issues in Effective Management of an NGO: A Case Study of Rajasthan Bal Kalyan Samiti. 2nd International Conference on Leadership and its Role in Preparing the Organisation for Unprecendented Change. Institute of Productivity and Management. Ghaziabad 9. Joshi, S., Hoda, N., and Sharma, M. (2011). Faith Based Model of Microfinance: An Alternative Tool of Poverty Alleviation. Conference of Inclusive Growth and Microfinance Access. Banaras Hindu University. India 10
  • 11. 2. Need for Study 11 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 12. Embracing death Microcredit has been the  bane of many a farmer. Many have been  forced to commit suicide.  https://parisar.wordpress.com/2012/03/ Anjumans deprive Muslim women of microcredit Swaminathan S Anklesaria  Aiyar, Economic Times  Bureau Nov 8, 2009,  10.17am IST 12
  • 13. Microfinance Industry • Approximately 130 million clients (World Bank 2014) • Outreach – less than 20% • Growing at a CAGR of 16.61% percent over the period 2012-2016 • Approximately 3 billion poor • The highest concentration of microfinance accounts in the world is in India (188 million accounts representing 18% of the total national population) 13 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 14. 3. Theoretical Underpinnings 14 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 15. Literature Review  Extant researches on mainstream microfinance institutions  Conceptual framework of faith-based organizations, development and microfinance 15 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 16. 16 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 17. 17 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 18. 18
  • 19. Indian Context 19PhD. Viva-voce : N.Hoda, November 24, 2015
  • 20. Issues in Mainstream Microfinance • Supply-side (Funding; Client needs; Sustainability) • Demand-side (Product differentiation; Awareness of duties; • Intermediation-side (Specialized institutions; For profit; Self-regulating) • Regulation-side (NGOs/Informal institutions; Uniformity; Positive environment) 20 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 21. Important References • Adams, D and von Pischke, J. D., 1992. Microenterprise credit programs: ‘deja vu’, World Development 20, 1463-1470 • Armendáriz de Aghion, B. and Morduch, J., 2000, Microfinance Beyond Group Lending. Economics of Transition, 8: 401–420 • Basargekar, P., 2009. Microcredit and a Macro Leap: An Impact Analysis of Annapurna Mahila Mandal (AMM) - An Urban Microfinance Institution in India The IUP Journal of Financial Economics, Vol. VII, Nos. 3 & 4, pp. 105-120, September & December • Consultative Group for Assistance of the Poor (CGAP), 2010. Global Implications of the Crisis in Indian Microfinance, Focus Note 67, Washington DC • Deaton, A., 2006. Measuring poverty. In A. Banerjee, R. Benabou, & D. Mookherjee (Eds.), Understanding poverty (pp. 3–15). Oxford, UK: Oxford University Press • Dichter T, and Harper, M. (eds), 2007. What's wrong with microfinance? Warwickshire: Practical Action Publishing 21
  • 22. Prize motivation:  "for his analysis of consumption, poverty, and welfare” - Focus on India The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2015 Angus Deaton 22PhD. Viva-voce : N.Hoda, November 24, 2015
  • 23. Faith-based Organizations “a faith-based organization is any organization that derives inspiration and guidance for its activities from the teachings and principles of the faith or from a particular interpretation or school of thought within that faith” (Clarke and Jennings 2008, p6) 23 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 24. Influence of faith on FBOs • Organizational Characteristics 1. Mission statement 2. Founding 3. Affiliation 4. Controlling board 5. Senior management 6. Support 7. Personnel religious practices • Programme Characteristics 1. Religious environment 2. Program content 3. Integration of religious components 4. Expected connection between religious content and desired outcome 24 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 25. Faiths and Financial Transactions • Principles of lending • Interest rates • Wealth accumulation • Trade • Charity 25 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 26. List of Faith-based MFIs Name Study Faith affiliation Country/ Head Office Christian Aid Varndell (2005), Harper et al. (2007) Christianity UK/Oxford Muslim Aid Clarke (2008 ) Islam UK/London SKDRDP Harper , et al. (2007), Ashta (2011), Shetty (2009) Jain India/Mangalore Hand In Hand M-CRIL (2010) Christianity UK/London India/Tamil Nadu Akhuwat Harper , et al. (2007) Islam Pakistan/Lahore COVA Harper, et al. (2007), Kaur (2007) Islam India/Hyderabad Al Farz Foundation Khaled (2011) Islam Pakistan/Lahore CAPARV Harper , et al. (2007) Islam India/Imphal ESAF Harper , et al. (2007) Christianity India/Chennai Al Khair Cooperative Credit Society Khan (2009) Islam India/Patna 26 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 27. 27 Catholic Relief Services Harper , et al. (2007) Islam India/Ranchi The Holy Cross Social Service Centre Harper , et al. (2007) Islam India/Hazaribagh LEAP Harper , et al. (2007) Christianity Liberia/Monrovia Village Development Project Bradley (2009) Hinduism India/Jodhpur Oxfam Bradley (2009) Christianity UK/Oxford Islamic Relief Worldwide Cordier (2009), Kirmani and Khan (2008) Islam UK/London World Jewish Relief (WJR) Kessler and Arkush (2009) Jewism UK/London Tearfund Wrigley (2011) Christianity UK/Teddington Muslim Fund Deoband Khan and Nisar (2004) Islam India/Deoband United Methodist Committee on Relief Clarke (2008) Christianity USA/New York Chinmaya Mission Sidhabari Paul (2012), Paranjape (2005) Hinduism India/Sidhabari SNDP Minimol and Makesh (2012) Hinduism India/Kerala
  • 28. 4.Research Methodology 28 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 29. AIMS-SEEP Framework  Assessing the Impact of Microenterprise Services (AIMS) - Small Enterprise Education and Promotion (SEEP) 1. the changes that occur in clients’ lives, their enterprises, their families/households, and their communities; 2. the extent to which the identified changes are related to clients’ participation in the microfinance program  Six Design Strategies 29
  • 30. Research Methodology • AIMS-SEEP Framework – Matured Clients only • Two phased study Phase 1 - Case Study Phase 2 - Impact Assessment 30 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 31. Phase 1 – Case Study • Selection of FB-MFIs • Data gathering - organization documents, archival records, interviews, direct observations, participant observation and physical artifacts • Data analysis (framework) 31 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 32. Phase 2 – Impact Assessment Poverty Variables A. Social Impact 1. Self Confidence 2. Social Status B. Women Empowerment 3. Treatment of others 4. Awareness of rights C. Economic Impact 5. Household Income 6. Business Income 7. Household Savings 8. Ability to meet emergency needs Client Satisfaction 1. Reasonability of interest rate on loan 2. Loan procedure 3. Loan repayment policy 4. Availability of loan 5. Discrimination in selection 6. Technical Assistance to clients for business 7. Location of the branch or point of transaction 8. Staff support 32
  • 33. Impact Assessment Methodology • Purposive sampling – 150 from Mainstream and 50 each from the three FB-MFIs – Total 300 • Data Collection – Use of survey questionnaire, Self-administered and with the help of Daily Collection Agents • Comparison of two set of MFIs – t-Test 33 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 34. 5. Empirical Findings A. Case Studies 34
  • 35. Institutional Overview 35 As of 2012 GRAVIS ACCSL PTCCSL Deposit (in Rupees) NA 2.1 Crores 93.83 Lakhs Loan Outstanding (in Rupees) 2.13 Crores 1.6 Crores 2.48 Crores Number of beneficiaries/members 16790 5221 1149 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 36. Influence of Faith on Organization 36 Factors GRAVIS ACCSL PTSCCL Mission statement X X Founding Affiliation Controlling Board X Senior Management Support X X X Personnel religious practices: PhD. Viva-voce : N.Hoda, November 24, 2015
  • 37. 37 Factors GRAVIS ACCSL PTSCCL Religious environment Program content: Integration of religious components X X X Expected connection between religious content and desired outcome X Influence of Faith on Programme PhD. Viva-voce : N.Hoda, November 24, 2015
  • 38. 5. Empirical Findings B. Impact Assessment 38 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 39. Gender Distribution 39 Gender Mainstream Faith-based Male 4(2.67%) 52 (35%) Female 146(97.33%) 97 (65%) TOTAL 150(100.00%) 149 (100%) PhD. Viva-voce : N.Hoda, November 24, 2015
  • 40. Occupation of respondents Occupation Mainstream Faith-based Service 0(0.00%) 21(14%) Self-employed 150(100%) 119(80%) Daily wages 0(0.00%) 09(06%) TOTAL 150(100.00%) 149(100%) 40 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 41. Types of self-employment Type Mainstream Faith-based Agriculture 7(4.67%) 10(8%) Small traders 35(23.33%) 60(51%) Services 21(14.00%) 35(29%) Manufacturing 87(58.00%) 14(12%) TOTAL 150(100.00%) 119(100%) 41 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 42. Incidence of borrowing from MFI 42 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 43. Average Loan amount 43 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 44. Repayment period 44 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 45. Loan repayment frequency 45 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 46. 46 Summary of results of hypotheses testing PhD. Viva-voce : N.Hoda, November 24, 2015
  • 47. 47 A. HYPOTHESES RELATED TO IMPACT OF THE PROGRAMME Variables Hypothesis Remark HA1:improvement in self-confidence Rejected Beneficiaries of secular microfinance report greater impact on this variable. HA2:improvement in status Rejected Beneficiaries of faith based microfinance report greater impact on this variable. HA3:treatment to women Accepted No significant difference found. HA4: awareness of women’s rights Accepted No significant difference found. HA5: improvement in monthly income Accepted No significant difference found. HA6: improvement in business income Accepted No significant difference found. HA7:improvement in household savings Rejected Beneficiaries of secular microfinance report greater impact on this variable. HA8:improvement in ability to meet emergency needs Accepted No significant difference found.
  • 48. 48 B. HYPOTHESES RELATED TO CLIENT SATISFACTION Variables Hypothesis Remark HB1: reasonability of interest rate Accepted Beneficiaries of secular microfinance report greater impact on this variable. HB2: loan procedure Accepted Beneficiaries of faith based microfinance report greater impact on this variable. HB3: repayment policy Rejected No significant difference found. HB4: timely availability of loan Rejected No significant difference found. HB5: discrimination among borrowers Rejected No significant difference found. HB6: technical assistance for business improvement Accepted No significant difference found. HB7: location of the branch or place of transaction. Accepted Beneficiaries of secular microfinance report greater impact on this variable. HB8: staff support Rejected No significant difference found.
  • 49. 6. Conclusions & Future directions 49
  • 50. Myths broken • Also a microfinance model – share the same principles and products • No discrimination • Not for women only • No one-size-fits-all product 50 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 51. Value Addition by FB-MFIs • Savings facility • Customized products • Interest rates • Over-indebtedness • Cultural issues • Grass-root organizations • Empowerment • Impact of faith 51 PhD. Viva-voce : N.Hoda, November 24, 2015
  • 52. Future directions • An Appraisal of Financial Sustainability of Faith-based microfinance institutions; • Role of faith in the Social Capital Formation by Faith-based microfinance; • Mainstreaming Faith-based Microfinance: Performance Evaluation; • An Assessment of the Common Virtues of Mainstream and Faith-based Microfinance and the Value Addition in the Process of Poverty Alleviation. • Religious Social Capital as a Substitute of Physical Collateral in Microfinance. • Impact Assessment of Faith-based Microfinance institutions 52
  • 53. Acknowledgements AcknowledgmentsPhD. Viva-voce : N.Hoda, November 24, 2015 • My Guides – Dr S. L. Gupta and Dr Viqar A. Baig • Dr Munish Makkad, Director, BIT Noida • Dr Meenakshi Pradeep, Dr Arun Mittal and all in the BIT Noida centre • Smt Shashi Tyagi, Chairman, GRAVIS • Mr Arshad Ajmal, Founder President, Al-Khair • Mr Francis Joseph, President, Patna Parish Credit Cooperative • All the Daily Collection Agents d53
  • 54. ? QuestionsPhD. Viva-voce : N.Hoda, November 24, 2015 54
  • 55. 55 THANK YOU !

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