EconPapers    
Economics at your fingertips  
 

How to Reconcile Financial Incentives and Prosocial Motivation of Loan Officers in Microfinance?

Julie De Pril and Cécile Godfroid

No 17-011, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: It has been widely recognized that the microfinance sector should pursue both social and financial objectives (double bottom line objective). However, with the growing success of microfinance, numerous microfinance institutions (MFIs) experience mission drift when they focus only on their financial mission at the expense of their social one. The mainstream incentive schemes set up by MFIs for their loan officers are one of the factors contributing to mission drift for several reasons. First, monetary rewards based on financial criteria may lead unscrupulous loan officers to push clients into overindebtedness. Second, financial incentives may have a negative effect on the prosocial motivation animating numerous microfinance loan officers. In this paper, we attempt to suggest, with a mathematical model, an optimal incentive scheme double bottom line on which MFIs could rely in order to preserve loan officers’ prosocial motivation while paying attention to their financial profit.

Keywords: microfinance; financial incentive; loan officer; financial performance; prosocial motivation (search for similar items in EconPapers)
JEL-codes: G21 J30 M52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-mfd
Date: 2017-03-17
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/248473/3/wp17011.pdf Œuvre complète ou partie de l'œuvre (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sol:wpaper:2013/248473

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/248473

Access Statistics for this paper

More papers in Working Papers CEB from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().

 
Page updated 2019-10-11
Handle: RePEc:sol:wpaper:2013/248473