Are donor funds used effectively? An examination of Islamic and conventional microfinance institutions

What is it about?

Islamic MFIs prioritize reaching the poorest segments of society to meet donor expectations, even if this allows them to reach fewer borrowers overall and exposes them to greater credit risk. Islamic MFIs may be less concerned about the quality of their credit portfolio because donations are sustainably available than their conventional peers. Donors can mitigate the credit risk of Islamic MFIs by imposing more monitoring.

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