The quest for harmonized impact measurement in microfinance investments

Microfinance funds are pioneers in the impact investing sector and play a key intermediary role in orienting capital flows from investors in developed markets to microfinance institutions (MFIs) in emerging and frontier markets. They invest with the objective to generate a measurable and positive impact, alongside financial returns, that contributes to sustainable development. Despite their three-decade legacy, microfinance funds are criticized for the lack of rigor and comparability in impact measurement (IME), a challenge that carries broader implications for the legitimacy of impact investing.
Whereas existing research has largely examined the effect of MFIs’ activities on end-clients, this dissertation shifts the analytical focus to microfinance funds themselves and investigates the organizational and institutional processes through which they shape IME and impact reporting practices. Thus, it asks to what extent are IME practices of microfinance funds harmonized? And what patterns of alignment and evidence emerge in the impact reporting practices of microfinance funds, and what do they reveal about the state of harmonization in the microfinance investment sector?
This dissertation adopts a qualitative research design, combining semi-structured interviews with impact and investment managers and investors, to generate original insights into how microfinance funds interpret and operationalize IME. These perspectives are complemented by a systematic analysis using the Impact Reporting Harmonization Matrix (IRHAMIX), a replicable framework that assesses the degree of harmonization, defined as the alignment with international impact initiatives and the evidence used to substantiate impact claims, in microfinance funds’ impact reports. Bringing these two sources of data together provides a coherent view of both the internal motivations shaping IME practices and the external claims through which microfinance funds communicate transparency and accountability. The empirical analysis reveals that while microfinance funds refer to a common set of impact
initiatives, this apparent convergence conceals substantial variation in how these are interpreted and applied. Impact reports similarly provide limited evidence, as most emphasize outputs and narrative descriptions rather than outcomes or methodological details, leading the majority of microfinance funds’ impact reports to fall within the « Selg-Legitimizer » rather than the « Harmonizer » profile of the IRHAMIX. These patterns expose a persistent gap between stated intentions and disclosed practices, suggesting that transparency often operates more symbolically than substantively.
By integrating actor-level practices with sector-level institutional dynamics, this dissertation shows that harmonization is not merely a technical exercise, but an institutional process shaped by the partial internalization of sector norms and by the incentives and constraints faced by microfinance funds. More broadly, the findings underscore that the credibility of impact investing increasingly relies on the production of harmonized impact reports, enabling transparency and comparability in the sector, illuminating governance challenges faced by private actors seeking to demonstrate their contribution to sustainable development.