The Paradigm Shift in the Microfinance Sector and Its Implications for Theory Development: Empirical Evidence from Pakistan

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Financial and non-financial subsidized resources at the disposal of international donor agencies available for continued support of the microfinance sector are not unlimited. One of the strategies resorted to by the donor community to ensure supply of financial resources to the sector was to make it lucrative to private-sector investment. The drastic shift in the microfinance paradigm during the early 1990s, when the donor community adopted a new approach as to the sustainability of microfinance institutions, changed the overall scenario of the paradigm. Instead of providing subsidized financial services to microfinance institutions (MFIs) for their life time, the donors started emphasizing self-sustainability, financial as well as operational, on the part of MFIs. These new issues came as ‘external disturbances’ (Laughlin, 1991) to Microfinance Institutions around the word, which were previously heavily dependent on the donors’, subsidized funding. The shift in the donors’ approach gave rise to a state of stiff competition among MFIs as they had to struggle for more business to ensure their survival in the long run. This move on the part of the donor community led microfinance institutions to adapt both functionally and structurally to better cope with donor’s expectations and show them profits. Many microfinance institutions set example of successful adaptation and reorientation of their tangible and intangible organizational elements to enable them to survive under these new conditions. Laughlin’s (1991) Model of Organizational Change provides a theoretical base for understanding such an organizational change in the light of changing external circumstances.

Stream: Economic Sustainability, Social Sustainability

Paper: A paper has not yet been submitted.

I earned my Masters degree in Business Administration (major, Accounting and Finance) in 1995 from the University of Peshawar, Peshawar, Pakistan, and joined the country's commercial banking sector. Being temperamentally more inclined towards a career in research and teaching, I quit banking in pursuit of a career in research and teaching. Knowing the significance of a higher qualification for achieving success in the field and pressed by the zeal and spirit of keeping a high profile in any field, I chose to enrol in a doctorate program at a university of international repute. In February 2003, with no formal background in teaching and research, the University of Wollongong, Australia offered me admission in Master of Finance – Research, leading to a PhD degree upon satisfactory performance in the course, which I accepted. By now I have earned PhD degree. I have been teaching accounting and finance subjects at the undergraduate and postgraduate levels at the university since March 2004. My main objective at the moment is to get a faculty position in a university and carry on my research work.