Issues in the sustainability of microfinance

Abstract

With increasing commercialization, the issues in the sustainability of microfinance have drawn much attention in recent times. However, very little is known about the critical role played by the subsidies on the financial and social performance of microfinance. How much subsidization of the microfinance cost to the society? Which microfinance institutions with particular characteristics (location, status, lending methodology etc.) benefit the most from subsidies? What are its impact on the efficiency and productivity of microfinance? Based on the data taken directly from the audit reports of 204 microfinance institutions, the empirical evidence further investigates the determinants of the interest rate policy, profitability and productivity of microfinance. Furthermore, the validity of mission drift phenomena in microfinance has also been investigated.