Doing Good and Avoiding Harm
Exploring the Impact of Social Performance Management on Customer Outcomes in Inclusive Finance.
Authors: Amelia Greenberg (Cerise+SPTF) and Alasdair Lindsay-Walters (MFR)
Introduction
Cerise+SPTF, in collaboration with MFR and 60 Decibels, conducted a research study to explore the correlations between Social Performance Management (SPM) practices and customer outcomes. Through this research, we sought insights into what management practices are critical to making financial services beneficial to customers while avoiding customer harm, to guide future improvements in the sector.
Methodology
The research combined data from 72 unique financial services providers (FSPs). Specifically, the data sources were:
- Cerise+SPTF: SPI Full and ALINUS3 audits, which assess SPM practices.
- MFR: Social audit (assessing SPM practices) and Impact Assessments (assessing outcomes).
- 60 Decibels: Microfinance Index data, which capture customer outcomes.
The dataset included 73 different variables on different management practices as well as a wide range of customer outcomes.
The analysis tested two main hypotheses:
- Stronger SPM practices are associated with better customer outcomes.
- Weaker customer protection (CP) practices are associated with worse customer outcomes.
Findings
The analysis revealed several statistically significant correlations between specific SPM practices and customer outcomes. Key findings include:
- Savings.
- A higher share of borrowers reports an increase in the level of savings when:
- Borrowers do not find that loan repayment is a burden.
- Borrowers find the fees, interest rates and penalties easy to understand and clear (better transparency).
- A higher share of borrowers reports an increase in the level of savings when:
- Business revenue.
- A higher share of borrowers reports an increase in business revenue when:
- Borrowers do not find that loan repayment is a burden.
- Borrowers find the fees, interest rates and penalties easy to understand and clear.
- Because of the FSP, the amount of time that customers spent worrying about finances has decreased.
- A higher share of borrowers reports a decrease in business revenue when:
- Borrowers do not find the fees, interest rates and penalties easy to understand and clear.
- A higher share of borrowers reports an increase in business revenue when:
- Business assets.
- A higher share of borrowers reports a decrease in business assets when APR is higher.
- Quality of life.
- A higher share of borrowers reports an increase in quality of life when:
- Borrowers do not find that loan repayment is a burden.
- Borrowers find the fees, interest rates and penalties easy to understand and clear.
- A higher share of borrowers reports an increase in quality of life when:
However, some correlations did not reach statistical significance. These findings indicate areas where further research is needed to fully understand the complexities of customer outcomes in inclusive finance.
Future Directions
Given the relatively small size of the dataset, future research should aim to expand the dataset and refine data collection methodologies. This will help clarify causal relationships and quantify effect sizes more accurately.
Read More! DOING GOOD AND AVOIDING HARM: Research on Correlations between Social Performance Management Practices and Customer Outcomes in Inclusive Finance.
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