Does It Pay to be Green? A Study of the Global Microfinance Industry

Leif Atle Beisland, Stephen Zamore and Roy Mersland

EconStor Open Access Articles and Book Chapters, 2023, vol. 52, issue 3, 653 pages

Abstract: This article examines whether it pays to be green in the microfinance industry. Environmental issues are important for all businesses around the world, and thus many microfinance institutions (MFIs) started embracing them as an additional objective alongside their traditional social and financial objectives. This article is among the first to test the relationships between environmental performance and both the financial and social performance of MFIs. Using a sample of 234 rated MFIs in 58 countries, we find that being green is associated with higher social and financial performance. Specifically, MFIs with environmental policies have higher financial performance (i.e., higher returns on assets, lower operating costs, and lower cost of capital) and higher social performance (i.e., a higher social rating score) than those without environmental policies. Overall, the results suggest that it pays to be green in the microfinance industry and this should motivate MFIs considering being green to do so.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:323838

DOI: 10.1177/08997640221110209

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