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Does microfinance institution has institutional properties to generate savings?

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Date
2016
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Abstract
Microfinance institutions (MFIs) in Bangladesh have been providing savings services to their clients at least for the past 15 years. However, whether an MFI should have institutional requirement(s) to be a deposit-taker generates interest among academics and policy makers. Thus, this short note aims to provide a brief overview of institutional properties of MFIs. This study used the existing literature and reports by the Microcredit Regulatory Authority' to investigate institutional properties of MFIs. In doing so, we have used 'institutional theory of saving' as a theoretical ground. Although the 'institutional theory of saving' has several important properties, the existing literature mostly discusses seven features such as information, incentives, facilitation, expectation, access, restrictions and security. It is found that MFIs in general should have all the seven important institutional properties to be considered as an ideal savings institution. With regards to the microfinance sector in Bangladesh, this study supports that all the NGO-MFIs have these properties to be considered as an ideal deposit taker. The microfinance sector in Bangladesh needs to design and develop comprehensive and customer friendly savings products to further motivate the poor to save in MFIs.
Keywords
Microfinance institutions , Saving , Institutional theory of saving , Bangladesh
Citation
Mia, M. A., & Tabet, I. (2016). Does microfinance institution has institutional properties to generate savings? Asian Journal of Business Environment, 6(3), 11-14. https://doi.org/10.13106/eajbm.2016.vol6.no3.11
Publisher
Korea Distribution Science Association (KODISA)

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