Publication Type

Journal Article

Version

acceptedVersion

Publication Date

1-2021

Abstract

We study how globalization can differentially affect financial inclusion through the lens of microfinance. Based on an institutional logics perspective, we argue that MFIs embody both social logic and market logic with regard to provision of affordable microfinance loans. Speicially, social logic is amplified by greater social globalization and the stronger presence of nonprofit organizations (NPOs) in the microfinance industry. In contrast, economic globalization catalyzes MFIs' market logic, leading to weaker or greater affordability of microfinance, depending on the relative strength of the profit-maximizing motive and real competition. We test these predictions by focusing on MFI interest-rate setting and using longitudinal data from 2030 MFI observations across 50 countries from 2002 to 2012. We find that country-level social globalization measure is negatively associated with the average MFI loan interest rates and that country-level economic globalization measure has an inverse U-shaped relationship with the average MFI loan interest rates. These results support our hypotheses and suggest a more nuanced view on how globalization affects affordability of microfinance.

Keywords

Economic globalization, Financial inclusion, Institutional logics, Microfinance, Non-profit organizations, Social globalization

Discipline

Finance and Financial Management

Research Areas

Finance

Publication

Journal of Business Venturing

Volume

36

Issue

1

First Page

1

Last Page

18

ISSN

0883-9026

Identifier

10.1016/j.jbusvent.2020.106065

Publisher

Elsevier

Embargo Period

11-3-2022

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.jbusvent.2020.106065

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