Sustainability and outreach in microfinance institutions in India: an ethical analysis

We use an ethical analysis framework to explain the tensions that microfinance institutions (MFIs) face in following ethical practices when faced with the competing objectives of financial sustainability and social outreach. The extant view is that these institutions have to resort to unethical prac...

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Bibliographic Details
Published in:Revue canadienne d'études du développement 2014-07, Vol.35 (3), p.358-375
Main Authors: Sathye, Milind, Mukhopadhyay, Benugopal, Sathye, Suneeta
Format: Article
Language:English
Subjects:
ethical analysis
Ethics
Financial analysis
India
Institutions
Interest rates
Microfinance
Suicide
Sustainability
Usury
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Summary:We use an ethical analysis framework to explain the tensions that microfinance institutions (MFIs) face in following ethical practices when faced with the competing objectives of financial sustainability and social outreach. The extant view is that these institutions have to resort to unethical practices such as usury interest rates and forced loan collections to survive. After a case study of five MFIs, we find that this is not the case, and competing objectives can very well be achieved following ethical practices. This article is set against the background of suicides by microfinance borrowers in India.
ISSN:0225-5189
2158-9100
DOI:10.1080/02255189.2014.936835