Revisiting efficiency of microfinance institutions (MFIs): an application of network data envelopment analysis

In order to achieve financial inclusion objectives of Sustainable Development Goals (SDGs) and provide continuous financial support to the unbanked population, microfinance institutions (MFIs) must attain efficiency in their operations. Hence, the main purpose of this study is to examine various efficiencies of MFIs based on their goals and operational mechanisms. By utilizing a unique production process and network data envelopment analysis (NDEA) technique, we estimated three different types of efficiencies (operational, financial and outreach) of 90 MFIs from 2013 to 2018. It was discovered that the overall efficiency of the MFIs was not up to the required standard and it became even worse when the financial and social outreach efficiencies were considered. However, operational efficiency (ability to generate intermediaries) was relatively better and remained high among the regulated MFIs. On the contrary, the financial and social outreach efficiencies were found to be better among the unregulated MFIs. Moreover, our results also highlight the divergence in efficiency between regions, legal status and regulatory environment; with projection analysis suggesting a simultaneous reduction in input, and an increase in output of inefficient MFIs to facilitate their attainment of efficiency. Policy implications are subsequently discussed

The Adoption of Ar-Rahnu and Financial Wellbeing of Microentrepreneurs in Malaysia

There is an urgent call for a potential justification on how and to what extent customers (microentrepreneurs) of Ar-Rahnu institutions in Malaysia are successfully driven their living standards from B10 (hardcore poverty) to B40 (low income). This study classified Ar-Rahnu’s adoption factors into three categories, namely, Shari’ah governance, uniqueness of Ar-Rahnu, and efficiency. 150 questionnaires were distributed to micro-entrepreneurs that used Ar-Rahnu and analysed using SmartPLS 3.0. Based on the results, it shows that Shari’ah governance has a low correlation and insignificant relationship towards Ar-Rahnu adoption. Stated differently, it means that customers find Shari’ah-compliance requirements not as important and it does not get in their way of getting instant cash from Ar-Rahnu. The other two constructs, namely as uniqueness and efficiency, have positive relationships with Ar-Rahnu adoption. It shows a significant and positive relationship with the Ar- Rahnu financing output. Unlike previous studies within the body of knowledge that mainly focuses on the adoption factors of Ar-Rahnu, this study went a step further by addressing the after-effect or impact of Ar-Rahnu adoption towards customers’ wellbeing, especially in terms of financial wellbeing and have found positive results

Nonlinear Relationship between Financial Development and CO2 Emissions—Based on a PSTR Model

The contradiction between financial development and environmental pollution has become increasingly prominent with economic development. The discovery of the link between financial development and carbon dioxide emissions will aid in the development of solutions to this problem. This paper uses a panel smooth transition regression (PSTR) model to examine the impact of financial development on carbon dioxide emissions using panel data from 28 Chinese provinces from 2005 to 2021. The PSTR model can solve the problem of minimizing potential outliers ignored in the previous literature, while taking into account the endogeneity and heterogeneity of the model and obtaining more reliable results. According to the findings, financial development has a nonlinear effect on carbon dioxide emissions. Furthermore, the positive effect of financial development on carbon dioxide emissions occurs via the scale and structural effects, while the negative effect occurs via the technological effect, which takes up more space. Moreover, financial added value and the financial scale demonstrate a smooth transition, while financial efficiency and foreign direct investment demonstrate a positive influence

ISLAMIC REGULATIONS AND ISLAMIC BANK MARGINS: AN EMPIRICAL INVESTIGATION INTO ASEAN COUNTRIES

This paper examines the impact of Islamic regulations on Islamic bank margins in ASEAN countries, utilising the fixed-effect method. The sample consists of 27 Islamic banks in Malaysia, Indonesia, Singapore and Thailand covering the period 2009 to 2017. The results suggest that Islamic regulations, such as the Islamic regulatory framework and Shari’ah supervisory board, are negatively associated with Islamic bank margins. These results have important policy implications for regulators, indicating that they should impose a separate regulatory framework for Islamic banks and bank managers to increase the number of Shari’ah scholars on the Shari’ah board in lowering Islamic bank margins. Overall, the findings suggest that Islamic banks should adopt regulations that should follow Shari’ah requirements, as they help to lower the cost of financial intermediation. As for the other control variables, only the Lerner index has a positive and significant impact on ASEAN Islamic bank's margin. Therefore, appropriate policies are necessary to foster competition in Islamic banks

THE UTILISATION OF ISLAMIC FINTECH (I-FINTECH) IN PROMOTING SUSTAINABLE INCLUSIVE GROWTH: EVIDENCE FROM MICRO-ENTREPRENEURS IN MALAYSIA

Information technology is fundamentally changing the world today. The power of technology applicable fastly in Islamic financial technology (i-Fintech), as it expands access to mobile financial services. This is evidenced by the increasing number of customers who interact using technology, especially micro-entrepreneurs, who adopt the tools into their business models to tap into this opportunity to enhance their income. Therefore, it is imperative to examine the impact of i-fintech use in stabilising micro-entrepreneurs’ income. A quantitative technique was employed through the use of 120 questionnaires distributed to micro-entrepreneurs who had adopted i-fintech into their business. Using Amos and SEM models, the study indicates that crowdfunding, mobile money and peer-to-peer lending play a significant role in ensuring income sustainability for micro-entrepreneurs. The study also discusses both the theoretical and managerial implications in comprehending the determinants of sustainable income growth in Malaysia. The findings should help practitioners, researchers and regulators to have better understanding of the dynamics between the potential of i-fintech and sustainable income