Islamic and Conventional Micro-Financing in the MENA Region

Abstract

The performance of MicroFinance Institutions (MFIs) is analysed for the period 2004-2015. Sample consists of 67 MFIs in the Middle East and North Africa region. It includes a subsample of 18 Islamic MFIs (IMFIs), whereof Solebusiness grants exclusively Islamic financial services and Window provides both Islamic and conventional services. A model of simultaneous equations with interacting variables tests seven hypotheses addressing financial performance, social performance, and the social and financial performance relationship. Conventional MFIs (CMFIs) experience higher financial performance than IMFIs and Window experiences higher financial performance than Solebusiness; IMFIs do not experience higher social performance than CMFIs; whether conventional or Islamic, MFIs face a financial vs. social performance trade-off.