Financial Self-sufficiency Research Articles

FINANCIAL OUTREACH AND FINANCIAL SUSTAINABILITY OF LICENSED DEPOSIT TAKING MICROFINANCE INSTITUTIONS IN NAIROBI CITY COUNTY, KENYA

Purpose: The purpose of this study was to investigate the relationship between financial outreach and financial sustainability of deposit taking microfinance institutions in Nairobi County, Kenya.
 Methodology: The study employed a positivism research philosophy to determine the relationship between financial outreach and financial sustainability. A population of 13 licensed Deposit Taking Microfinance Institution was considered for this study. Census method was preferred due to small number of target population. A static Panel linear regression model with fixed effect was developed for both operating self-sufficiency and financial self-sufficiency. Secondary data was obtained from Central Bank of Kenya from audited financial statements. Inferential analysis method was employed using Stata statistics software then descriptive statistics tool such as mean and standard deviations were used. several diagnostic tests were conducted namely: normality, multicollinearity, heteroscedasticity, serial correlation, stationarity and Hausman.
 Results: The study found that number of active clients (breath of outreach) had statistically significant relationship; Average loan size (depth of outreach) had insignificant; age of firm (experience of institution) had insignificant relationship on financial sustainability of DTMFIs in Nairobi County, Kenya. The moderating effect between credit risk management (portfolio at risk) and breadth of outreach (number of active clients) was positive while portfolio at risk and experience of institution (age) and depth of outreach (average loan size) was negative on the relationship between financial outreach and (OSS and FSS) financial sustainability. Further, loan loss provision coverage had positive interaction with number of active clients, age, and average loan size on the relationship between financial outreach and financial sustainability of DTMFIs in Nairobi County, Kenya.
 Unique contribution to theory, practice and policy: The study recommended that the government through Central Bank of Kenya should formulate policies that enhance savings with DTMFIs and therefore encourage financial inclusion. Further, DTMFIs should engage in vigorous financial education to boost financial facilities’ awareness to boost the breadth of outreach and get involved in information collection and sharing to mitigate credit risk.

Assessment of the level of local budget financial decentralization: Case of Ukraine

Further improvement of financial relations at the local level and the development of local budgets take place in the context of financial decentralization. This implies strengthening the role of local governments in attracting necessary financial resources to ensure socio-economic development of territories. The purpose of this paper is to identify the impact of decentralization on the state of local budgets and to develop a scientific and methodological approach to assessing the level of financial decentralization of local budgets using the example of Ukraine for 2010–2019. The developed methodology consists of six successive stages. A comparative analysis of the dynamics of indicators of local budget execution in Ukraine in terms of revenues, expenditures and transfers using an integrated index obtained through taxonomic analysis is conducted. As a result of evaluating the effectiveness of the basic principles of financial decentralization, the expediency of calculating the integrated index of local budget financial decentralization is substantiated. This index is formed using intermediate indicators of autonomy to cover expenses and generate income both on the basis of own sources and taking into account the received state transfers for the implementation of their own and delegated powers of local governments. The implementation of the proposed method allow one to assess the levels of financial decentralization of local budgets to establish the degree of financial autonomy and financial self-sufficiency of the territories. The results obtained should be considered when determining the effectiveness of financial support for local budgets in the process of socio-economic development of regions.

Science and Technology Park Management Implanted in the Missions Region (RS), a regional vision of scientific and technological development.

Innovation and technology, which are part of the debate in the knowledge society, are linked to the creation of a prosperous environment that benefits them, the result of multiple and coordinated action of three factors: government, productive structure and technological and scientific infrastructure. The investigation starts from the following question: What is the best methodology for managing the structures known as Science and Technology Parks? The objective of the research is to develop a management model for the Scientific and Technological Park of the Missions Region in order to optimize its economic and financial self-sufficiency so that it does not depend exclusively on resources from the University or from public notices. In methodological terms, the research is a qualitative one, of an applied nature since its results will be used in practice to solve a specific problem. As preliminary results, a self-sustainable management model for the Scientific and Technological Park of the Missions is presented, considering its specificities and peculiarities. This model was developed from the investigation of the main methodologies used in PCTs in different regions of the world and in Brazil, with the purpose of indicating the most appropriate strategies for the implantation of PCTs in a farming region, as well as, identifying the regional base actors technology to understand the operation of the Triple Helix.

Estratégias para a retomada do desenvolvimento no ciclo de vida de uma empresa de tecnologia da informação

The article reports the intervention carried out in a company of information technology services. The objective was to reconfigure the business model to create value for customers and also for the company´s managing partners. We sought to reverse the downward trend in the life cycle of the company. The work, of interventionist character, follows the methodological procedures for practical and applied works proposed by Marcondes, Miguel, Franklin and Perez (2017), and focuses on proposing problem solutions and identifying opportunities. Compared to the initial scenario, which revealed inefficiency in communication processes, contract management, integration between areas, performance control and customer satisfaction, the business was improved through the adoption of a new business model. This new model considers the needs of customers and the conditions to expand the offer of value. Among the results, we highlight the awakening of managers' awareness to the demand for resources, key activities and strategic partnerships, which transformed the ability to meet market opportunities with economic and financial self-sufficiency. By sharing the description of the found solutions to deal with elements such as: the complexity related to the uncertainty surrounding the decision-making process, the need to change people's behavior, resistance to change, and communication obstacles, it is expected that it will contribute to the development of other businesses, and also to society in general, through consequent expansion of the offer of jobs and satisfaction of community needs.

Земельна децентралізація як основа фінансової спроможності та сталого розвитку сільських територіальних громад

Земельна децентралізація як основа фінансової спроможності та сталого розвитку сільських територіальних громад

Особливості реформування системи територіальної організації влади в Україні в умовах децентралізації

Problem statement in general and its connection with important scientific and practical tasks. Power decentralization as a component of public policy is one of the key reforms on the agenda in Ukraine, which creates the basis for radicalization of institutional change, improving the quality of citizens life and is important for the continuation of sectoral reforms. The aim of decentralization policy is to move away from the centralized model of governance in the country, ensure the capacity of local self-government and build an effective system of territorial organization of power in Ukraine, fully implement the European Charter of Local Self-Government, subsidiarity, universality and financial self-sufficiency of local self-government.The aim of the article is to study the peculiarities of reforming the system of territorial organization of power in Ukraine in the context of decentralization through modeling the effective financial activities of local governments of united territorial communities.The paper main body. The article analyzes the features of reforming the system of territorial organization of power in Ukraine, which implies a departure from the centralized model of government in the state, ensuring the capacity of local self-governance and building an effective system of territorial organization of power in Ukraine; full implementation of the provisions of the European Charter of Local Self-Government, the principles of subsidiarity, universality and financial self-sufficiency of local self-governance.Changes in the administrative-territorial structure of Ukraine are analyzed. In particular, the draft Law of Ukraine "On the principles of administrative-territorial organization of Ukraine", register. № 8051 dated February 22, 2018; draft Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine Concerning the Regulation of Certain Issues of Activity and Organization of Public Authorities, Local Self-Government Bodies in Connection with the Formation (Liquidation) of Districts", Register. № 3651 dated 12.06.2020.Conclusions of the research. It was established that the process of consolidation of administrative-territorial units of the basic level, aimed at the formation of capable and viable local self-governance, has led to the transformation of the territorial structure and subregional level – the next stage of improving the territorial organization of power. It was proved that modeling of effective financial activity of local self-government authorities of united territorial communities in the conditions of decentralization consists of search by local authorities of own budgeting tools and real sources of receipts in the subordinate territory. The author’s position that the reorganization of authorities of the State Fiscal Service should take into account the European experience, including the EU NUTS Standard (Nomenclature of Territorial Units for Statistics), was substantiated.The idea of the reorganization of controlling authorities by analogy with approaches to the administrative-territorial structure, for example with the application of the EU NUTS Standard, was substantiated.

USE OF IDENTIFICATION TOOLS FOR THE ADMINISTRATION OF THE DEVELOPMENT OF AMALGAMATED TERRITORIAL COMMUNITIES (ON THE EXAMPLE OF DONETSK REGION)

The presented article examines the use of identification tools by amalgamated territorial communities of Donetsk region, information about which is included in the strategies of their socio-economic development, in order to build an effective system of their development administration. To achieve this goal, a general assessment of the decentralization process in the region has been conducted. It is noted that the main factors of the high rating of the region for the formation of ATC are the following: the large number of their population and significant state financial support. Stable growing of the resource base in all communities of Donetsk region, functioning for more than one year, their predominant financial self-sufficiency against the background of increasing the share of expenditures for the management of financial resources and abrupt dynamics of capital expenditures that do not correlate with budget revenues рфму иуут stated. The well-established processes of providing financial resources and problems with the administration of development expenditures in the communities of the region are noted. The possible connection of such miscalculations with the lack of ATC identification or its low quality of carrying out is substantiated. In order to confirm the assumption, the strategies of social and economic development of amalgamated territorial communities of Donetsk region in the context of their use of identification tools are monitored. It is determined that the majority of communities in which strategies have been developed and approved have limited use of identification tools, paying, however, considerable attention to the formation of their own positive image. The positive experience of Mykolayivska and Lymanska ATCs, as well as the negative experience of Olekandrivska and Zvanivska ATCs have been noted against the background of the absence of significant differences among the communities of the region regarding their planning of identification application in the context of optimizing development administration. There is a positive trend in the widespread use of marketing tools in terms of creating a positive image of communities, which opens up new opportunities for their successful positioning and promotion, thus taking care of their development.

Analyzing the Performances of Water User Associations to Increase the Irrigation Sustainability: An Application of Multivariate Statistics to a Case Study in Italy

Benchmarking techniques are useful and simple tools to analyze the performance of the collective irrigation in the Water User Associations (WUAs) towards an increase in service sustainability. Several benchmarking techniques have been proposed to process and predict performance indicators. Instead, some meaningful statistical techniques based on the distance of data samples, which overcome the limitations of the traditional benchmarking techniques, have never been applied to the collective irrigation sector. This study applies Permutational Multivariate Analysis of Variance (PERMANOVA), Multidimensional Scale Models (MDS), and Distance-Based Linear Models (DISTLM) as benchmarking techniques to evaluate the technical and financial performances of 10 WUAs in Calabria (Southern Italy). These benchmarking techniques revealed that the significant differences in the irrigated areas and financial self-sufficiency of the WUAs, shown by PERMANOVA, depend on the large variability of the remaining performance indicators. Both the MDS and DISTLM demonstrated that a higher number of associated users and larger irrigation service coverage allows an increase in the irrigated areas; this enlargement is facilitated if the water price and the size of the personnel staff decrease. The WUAs’ self-sufficiency is mainly influenced by the number of workers and the maintenance, organization, and management costs, while the impacts of the due service fees and water price are more limited; it is also convenient to increase the number of the associated farmers since this increases the economy of scale and the gross revenues of the irrigation service. Overall, from the analysis carried out for the regional case study, these benchmarking techniques seem to be powerful and easy tools to identify the problems of the irrigation service and help in planning the most suitable policies to improve the sustainability of the collective irrigation at the regional scale.

Leading complementary schools as non-profit social entrepreneurship: Cases from Lithuania

The article explores the topic of leading complementary schools as models of non-profit social enterprises, reflecting the way the sector has developed in Lithuania. Complementary schools in Lithuania provide educational services often related to language and cultural education focusing on different groups such as minorities, immigrants and people with disabilities. They use client-focused activities to achieve social goals and maintain financial self-sufficiency. Therefore, the leadership of these organizations is of major importance. Group discussions were conducted with 32 heads of complementary schools to explore their perceptions of the entrepreneurship competencies they need to meet the challenges they face in establishing and sustaining their non-profit organizations. Viewing complementary schools as non-profit social enterprises and their leaders as social entrepreneurs contributes to the understanding of them as organizations and the wide range of competencies and practices needed to lead such schools effectively with implications for pre-service and in-post leadership development.

Organizational and legal institutions, and the performance of microfinance institutions as hybrid entities

PurposeMicrofinance institutions (MFIs) play an important role in economic development, with the dual objectives of social outreach and financial self-sufficiency. The purpose of this study is to examine the influence of organizational structure and variations in legal systems on the MFI dual performance goals.Design/methodology/approachUsing a sample that includes 1,518 MFIs from 105 different countries over a period of 20 years, this study analyzes the data by applying a model that includes six categories of organizational structures and variations of legal systems, including both civil and common law, with accounting performance measures for the dependent variables.FindingsThe analyses provide robust results indicating that MFIs structured as non-governmental organizations (NGOs) have better social outreach than all other types of MFIs and exhibit better financial performance than MFIs registered as commercial banks or credit unions. Legal systems also played a role in MFI effectiveness.Research limitations/implicationsGiven the increasing importance of MFIs on economic development globally, this study has relevance on how the impact of MFI structural characteristics and macro-level influences on their dual performance criteria can be translated into management approaches and governance policies that can increase the effectiveness of these dual (i.e. social and financial) goals.Originality/valueThis study is more comprehensive than prior research in addressing the influence of organizational structures of MFIs and legal systems on MFI dual mission, namely, its financial performance and social outreach, thereby increasing our understanding of policy implications in sustaining the MFI’s developmental role.

México: descentralización fiscal en momentos de cambio y auteridad

As this time, the Government of Mexico follows a logic of fiscal rationality and austerity, with the objective of exercising the budget efficiently and effectively, however, this approach can be detrimental to subnational governments, because the contraction of public spending can cause several risk to some federal, state or municipal programs, that may be eliminated, which would result in an increase in the inequality gap, caused by the decrease in support from the Federal Government, as well as the weak fiscal structure and the little financial self-sufficiency that local governments have. Therefore, this article seeks to answer the following questions: Expand centralization or decentralize your spending? Should you begin to decentralize income? What are the necessary changes so that an advance on decentralization can produce the expected results? Is austerity at the central level the best scenario to establish a better relationship of fiscal coordination?

The positional MEF-TOPSIS method for the assessment of complex economic phenomena in territorial units

Abstract In this paper, the authors propose a new methodological approach to the construction of a synthetic measure, where the objects are described by variables with strong asymmetry and extreme values (outliers). Even a single extreme value (very large or very small) of a variable for the object may significantly affect the attribution of an excessively high or low rank in the final ranking of objects. This dependence is particularly apparent when using the classical TOPSIS (Technique for Order of Preference by Similarity to Ideal Solution) method. The aim of the study is to present the application potential of the positional MEF-TOPSIS method for the assessment of the level of development of complex economic phenomena for territorial units. In the positional TOPSIS method, the application of the spatial median of Oja, which limits the impact of strong asymmetry, is proposed. In order to weaken the influence of extreme values, the Mean Excess Function (MEF) is used, by means of which it is possible to identify the limits of extreme values and establish model objects. The proposed approach is used to assess the financial self-sufficiency of Polish municipalities in 2016. The study finally compares the results of applications of positional MEF-TOPSIS and the classic and positional TOPSIS methods.

The need for financial and administrative self-sufficiency of urban municipal entities

Subject. The article discusses the system of local government in urban districts of the Russian Federation, its distinctions and development impediments. Objectives. The study determines whether it is reasonable to create internal municipal entities in cities of urban districts from perspectives of their fiscal and administrative self-sufficiency. Methods. I used general methods of research, such as comparison, analysis, synthesis, analogy and systems approach. Results. I analyzed financial and organizational conditions for urban districts and internal city districts in the Russian Federation before and after local government reforms. Nowadays, internal districts in cities are found to have ceased their financial and administrative independence, whether they have their own budget or not. Their operations do not improve the overall local government system. Therefore, I suggest setting the mechanism for the bottom-to-top authority assignment, rather than the top-to-bottom one. Thus, internal municipal entities will be allowed to determine powers, allocate funds, delegate them to urban district authorities. Local authorities will show better performance, since people will be directly involved in local decision-making processes and support their initiatives before municipal authorities. Conclusions and Relevance. The analysis and recommendations will help municipal entities of the Russian Federation make decisions concerning their intentions to become an urban district with internal districts within a city. The findings are useful to outline development lines for local government in Russia.

Estudo de Mercado de Café Biológico de STP

The Monte Cafe region, once a prominent place in coffee production, declined with the country's independence in 1975. As a result of the structuring and grouping of 6 smallholder associations, CECAFEB (Organic Coffee Export Cooperative) was created in order to relaunch 510 organic coffee-growing farmers. Despite the strategy of financial self-sufficiency and the commitment to high value-added products, CECAFEB faces problems of low volume production and difficulties in supply and market knowledge. This study aims to make a market study of organic coffee, including its selling and non-selling establishments, in Sao Tome and Principe (STP). The adopted methodology, of mixed nature (qualitative and quantitative), was developed in two stages: The first being exploratory research and the second a conclusive-descriptive research (based on observation and data collection by interview and the survey method, through a structured questionnaire built for the purpose, applied to the universe of current and potential customers of the STP cooperative). The results, in addition to identifying the links in the organic coffee value chain and potential customer establishments of this product, revealed a lack of knowledge of organic coffee, the brand and CECAFEB. The certification of coffee as organic, is a valued attribute in the purchase and consumption.

Macro-and microfinance indicators as the “markers” of borderline dangerous economic states of the territory

Leaning on the analysis of the provisions of economic science, which article assesses interrelation between the links of financial system of the country on the one hand, and the impact of the level of financial soundness of businesses and households upon financial security of public law entities on the other; as well as dependence of satisfaction of needs of the individual in public goods on the fullness of centralized monetary funds. Such dependence requires peculiar approach towards determination of financial self-sufficiency of micro-and macroeconomic agents; however, the majority of elaborations focus solely on the public finance, which become the reason for emergence of borderline state of regional economy upon the criterion of its protection from threats – conditionally secure or pseudo secure. In this regard, the goal of this article lies in development of the system of financial-economic indicators and their threshold values; its implementation is aimed at identification of negative trend – indicators of destructive processes in the national economy. The following methods were applied in the course of this research: general scientific – analysis, synthesis, induction, deduction for revealing the peculiarities of ensuring economic security of public law entities in the financial sector; specific scientific – statistical analysis for assessing financial-economic parameters of development of the territory; methods of qualitative assessment of the systems for differentiating the regions upon the criterion of security from financial threats. Considering mutual impact of public and private finance, the author develops the system of financial-economic indicators, the positive dynamics of which testifies to consolidation of financial self-sufficiency of economy of the territory; while negative dynamics in the medium and long-term period testifies to destabilization of certain vital processes of macro - and micro-subjects. Its peculiarity consists in combination of basic and additional coefficients that reflect financial situation of economic agents of various level and determination of their “thresholds”. Implementation of the author's approach in assessment of functionality of financial system of the country is aimed at identification of occurrence causes of borderline dangerous economic states of the territories.

Regional differential decomposition and convergence of rural green development efficiency: evidence from China.

An objective understanding of the current situation and influencing factors of rural green development in China is an important prerequisite for effective formulation making of green development policies. Based on the panel data of 31 provinces of China from the year 1997 to 2017, this paper constructs and measures the rural green development efficiency (RGDE) based on Driving-Force, Pressure, State, Influence, Response (DPSIR) model and super-efficiency slacks-based measure (SBM) model. The results show that, the overall RGDE in China is fluctuating and rising from 1997 to 2017, and there are some differences between and within regions. The RGDE in developed areas is higher than that in developing areas, and coastal areas are higher than that in inland areas. The entire country, eastern, central, and western regions show σ convergence, which indicates that the RGDE is getting better, but there is no absolute β convergence, that means there is no "catch-up effect" between regions, but the gradient divergence showed central > eastern > western. At the same time, there is no conditional β convergence; the initial RGDE has a positive impact on the growth rate of RGDE, and the financial self-sufficiency rate promotes the growth of RGDE of the whole country and the western region, but inhibits the improvement of RGDE of the eastern region. The per capita GDP, mechanization degree, and agricultural industrial structure in rural areas did not promote the growth of RGDE. Based on the results, this paper puts forward some policy suggestions, such as promoting the classified implementation of rural green development policies, strengthening the top-level design, optimizing the existing agricultural mechanism and system, and guiding and standardizing the farmers' green production behavior.

Disentangling the dynamics of social assistance: A linked survey-Register data cohort study of long-term social assistance recipients in Norway.

Social assistance is a means-tested benefit that is supposed to be a short-term, temporary economic support. Understanding why some individuals are in repeated or continuous need of social assistance is thus of obvious policy relevance, but the dynamics of social assistance receipt remain poorly understood. In 2005, a survey among long-term recipients of social assistance in Norway collected data on (a) childhood disadvantages, (b) health status, (c) health behaviors, (d) psychological resources, and (e) social ties, in addition to basic sociodemographic information. This rich survey data has been linked with tax register data from 2005–2013, enabling us to explore the detailed characteristics of long-term social assistance recipients who are unable to reach financial self-sufficiency. Results from linear probability models show that surprisingly few of the 28 explanatory variables are statistically associated with social assistance dynamics, with two important exceptions: People with drug problems and immigrants both have a much higher probability of social assistance receipt. Yet overall, it is challenging to ‘predict’ social assistance dynamics, indicating that randomness most likely plays a non-negligible role. The 28 explanatory variables do a far better job in predicting both labor market success (employment), labor market preparation (work assessment allowance), and labor market withdrawal (disability benefit utilization). Thus, there seems to be something distinctive about the processes leading to continued social assistance recipiency, where randomness could be a more influential force.

The Financial Identity Scale (FIS): A multinational validation and measurement invariance study among emerging adults

The transition from financial dependence on one’s parents to financial self-sufficiency is one of the most relevant transitions during emerging adulthood. It is important to have an instrument able to assess emerging adults’ financial capabilities and to detect its change over time. The current article aims to collect international evidence of the Financial Identity Scale (FIS) validity and reliability. Cross-sectional data collected from 2,501 emerging adults aged 18–25 and belonging to three different countries—U.S. (n = 1,535), Italy (n = 485), and Lithuania (n = 481)—were adopted to test score structure validity, generalizability, sensitivity to difference, criterion-related validity, and internal consistency. Instead, four-wave longitudinal data, available for the American sample only (n = 1,900), were adopted to test FIS structural stability and sensitivity to change. As recommended by the contemporary view of validity, different structural equation models were performed. Findings suggest that FIS scores are valid and reliable. The implications for researchers and practitioners are discussed.

Who Says “I Do”? Financial Resources and Values on Relationship Choices of Emerging Adults

This study examined potential impacts of financial resources and values on emerging adults' choice in committed relationships (N= 424, 26–35 years). Guided by Deacon and Firebaugh's (1988) Family Resource Management theory, financial self-sufficiency and forming a committed relationship were conceptualized as two salient goals of emerging adulthood. Multinomial logistic regression was used to determine the effects of financial self-sufficiency, values, and personal background factors on choice of committed relationship status. Findings indicated that emerging adults with fewer financial resources chose to live apart; however, the effects of career values were a stronger predictor of their relationship status. In contrast, neither financial resources nor career values differentiated between cohabiting and married emerging adults.

Analysis of financial sustainability indicators of higher education institutions on foreign direct investment

Purpose The purpose of this study is to examine the impact of financial sustainability indicators of higher education on foreign direct investment (FDI) using empirical evidence from 26 Organization for Economic Co-operation and Development (OECD) countries. The basic criterion for determining the financial sustainability of higher education institutions included indicators of income generated by higher education institutions being greater than the operational costs. However, this requires financial sustainability, which depends on financial self-sufficiency without seeking external financial assistance. This situation is affected by investment attractiveness. Design/methodology/approach Three quantitative proxies were used in this study to explain the financial sustainability indicators in higher education institutions of OECD countries: financial expenditures proxy measured by current tertiary education expenditure (CE); efficiency proxy measured by university-life expectancy (ULE) and endogenous growth proxy measured by gross enrolment tertiary ratio (GETR) to show the effect on FDI. Also, this study used six control variables considered an important part of experimental design and refers to contributing factors that were eliminated to clarify the independent variable and a dependent variable nexus. The quantitative data was collected from World Development Indicators (WDI). This study applied a STATA version using panel data techniques for over 15 years from 2001 to 2015 and also used fixed effect (FE) and random effect (RE) estimations to address problems of heterogeneity. To mitigate the endogeneity problem, the generalized method of moments (GMM) was also used. Findings The results of this study were derived from the adoption of financial models applied in higher education institutions to test the financial sustainability indicators. Based on the RE and FE results, a one per cent increase in the current tertiary education expenditure caused about 0.19 and 0.18 per cent increase in FDI in the OECD economies. This positive and significant impact was higher when considering the problem of endogeneity by applying the GMM estimations. FDI grew by about 0.22 per cent when the CE increased by one percent. Meanwhile, there was a significant and negative relationship between FDI and the GETR variable for the FE results but this previous relationship was insignificant for RE estimations. The FDI in OECD economies decreased by about 0.0006 per cent when the GETR increased by 1 per cent. This negative effect became larger when applying the GMM estimations. Finally, the ULE results showed there was a positive and insignificant relationship between ULE and FDI for all estimators. Practical implications The management and analysis of the financial health indicators is necessary to evaluate educational activities but is not sufficient to achieve financial sustainability, which extends beyond the indicators of financial health to encompass factors such as student achievements; research and scientific output; community engagement; productive capacity; quality inputs; risk and infrastructure; and systems. Originality/value This study is considered one of the few existing studies examining the ways in which to achieve financial sustainability in higher education institutions using quantitative financial methods. Specifically, this study adopted Pecking order theory in its analysis of the financial sustainability indicators to clarify whether the financial sustainability indicators of higher education institutions lead to an improvement in the attractiveness of foreign investment in OECD countries in the long run. The findings contribute to the necessity of adopting internal financing sources in accordance with the Pecking Order theory to help achieve financial sustainability growth.