Sustainability Of Microfinance Institutions Research Articles

Capital structure, financial performance and sustainability of Microfinance Institutions (MFIs) in Ghana

Capital structure, financial performance and sustainability of Microfinance Institutions (MFIs) in Ghana

Financial Sustainability of Microfinance Institutions : Evidence from India

Financial Sustainability of Microfinance Institutions : Evidence from India

Empirical Study on the Key Influencing Factors and Development Mechanisms for the Sustainability of Microfinance Institutions Based on a Survey of Chinese Microcredit Companies

Microfinance institutions (MFIs) play a significant role in financial-inclusion and poverty-alleviation activities. A critical challenge facing MFIs is of how they all can build their own capacity for sustainable and healthy development. By using the data from the pilot survey of 65 microcredit companies in Zhejiang, China, this paper explores the factors affecting MFIs activities by principal component analysis and analyzes the key Influencing factors and sustainable development performance with the analysis of variance and multi-regression model. The results indicate that four key factors of operational technology, external environment, financial condition, and institution size have a significant positive effect on the economic sustainability performance of MFIs, while the adjusted institution size has an insignificant positive effect on operational sustainability performance, which means that key factors of MFI sustainability have a greater impact on economic sustainability performance than operational sustainability performance.

Competition in Microfinance Institutions: Does Voluntary Saving Product Have a Moderating Role?

This study investigates the effect of competition and the moderating role of voluntary savings on the outreach and sustainability of Microfinance Institutions (MFIs). The study uses data from 39 countries and 609 MFIs from 2004 to 2018. Unit of analysis in this study includes all MFIs in the Mix Market database. It uses Boone Indicator to measure competition. In addition, this study uses the random effects model to regress the model. We find that competition corresponds with decreased outreach and sustainability, but the value is insignificant. The first research question is how competition affects MFIs’ outreach and sustainability, and the second research question is whether voluntary savings can work as a moderating variable in the relationship between competition and MFIs’ outreach and sustainability. Findings of this study provide guidance to MFIs and regulators regarding the ideal form for MFIs whether they should prioritize lending or expand their services to include voluntary savings. DOI: 10.26905/jkdp.v27i4.11014

Togo'da mikro finans kurumlarının finansal performansı ve sürdürülebilirliğinin belirleyicileri

Purpose - This article investigates the factors influencing the financial performance and the level of financial sustainability of microfinance institutions (MFIs) in Togo. Methodology - Ordinary least squares models and binary probit models were employed in the research to identify the determinants of return on assets as a proxy for the financial performance and operational and financial sustainability of microfinance institutions. Unbalanced panel data collected from the MIX Market database of 29 MFIs in Togo over the period 1999–2018 was used in the study Findings – The results show that MFI's financial performance is positively and statistically influenced by size. However, the number of depositors per borrower and the loan loss ratio is negatively linked to financial performance. The operational sustainability was positively related to the depositors per borrower ratio, the PAR > 30 (Portfolio at Risk 30 days), and the productivity ratio. On the other hand, it is negatively related to PAR > 90 and the ratio of personal expenses to outstanding credit. Finally, financial sustainability was significantly and positively influenced by the size, and it was significantly and negatively influenced by PAR > 90. Conclusions – Taking these results into account can allow microfinance actors in Togo as well as politicians and donors to better orient their actions in the sector.

Employee turnover and the credit risk of microfinance institutions (MFIs): International evidence

In today's competitive world, credit risk poses a significant challenge to lending institutions such as microfinance institutions (MFIs) due to its impact on their long-term institutional and financial viability. In recent years, high employee turnover has also emerged as a threat to the sustainability of MFIs. Therefore, this study investigates the impact of employee turnover on the credit risk of MFIs using nine years of unbalanced panel data (from 2010 to 2018) of 1266 unique MFIs from 101 countries, obtained from the World Bank databases. In general, we observe that employee turnover raises the credit risk of MFIs. The result is robust to endogeneity-correction techniques (e.g., Hausman-Taylor) and other alternative specification/robustness tests. The findings offer valuable insight for MFI managers, enabling them to make informed decisions about employee turnover management to mitigate credit risks.

Frontiers in microfinance research for small and medium enterprises (SMEs) and microfinance institutions (MFIs): a bibliometric analysis

This article aims to present current research trends in microfinance for small and medium enterprises (SMEs) and microfinance institutions (MFIs), as microfinance plays an increasingly role in entrepreneurship development and poverty alleviation. The study uses a bibliometric analysis, in this work, we performed citation, bibliographic coupling, and keyword evolution analyses. The results show that research in microfinance for SMEs and microfinance institutions continue to grow. The authors found that recent research in microfinance for SMEs and microfinance institutions has evolved around eight thematic clusters, covering (1) access to and constraints on microcredit for SMEs (2) microfinance and economic empowerment, (3) sustainability of MFIs, (4) creditworthiness, microfinance technology infrastructure and financing patterns, (5) Islamic financial inclusion, (6) credit assessment models for microcredit, (7) microfinance and innovative business models, and (8) gender and equity crowdfunding. Research gaps in each of the thematic clusters are identified. Topics related to COVID-19, Islamic social finance, microfinance institutions, credit scoring models, crowdfunding, and entrepreneurial finance are likely to feature in the domain of microfinance and sustainability of MFIs in future.

The Determinants of the Sustainability of Microfinance Institutions Through the Control Systems: Case of Cameroon in Context Covid19

The Determinants of the Sustainability of Microfinance Institutions Through the Control Systems: Case of Cameroon in Context Covid19

Impact of stakeholders as board members on sustainability and social outreach of microfinance institutions in developing markets

The purpose of this study is to explore how stakeholders on the board contribute to sustainability and outreach of microfinance institutions (MFI). Stakeholders as board members can influence the social outreach and sustainability of microfinance institutions (MFIs). By applying a multi-theoretical approach to a longitudinal dataset from a developing country perspective, this study analyses stakeholder involvement on the MFI board and its impact on double-bottom-line performance. The results suggest that independent directors on the board have significantly positive effects on achieving microfinance institutions' dual missions: sustainability and outreach. However, some stakeholders have produced mixed results. Employees, donors, and female board members play significant roles, although their impacts are moderated by the age and size of MFIs. CEO duality contributes to MFI sustainability but inversely affects outreach. The results support the stakeholder, stewardship, and resource dependence theories. This study recommends the appointment of an independent board member as a social director to widen the range of stakeholders' involvement in the boards of MFIs and contribute to achieving its objectives in a developing market context.

The trade-off between outreach and sustainability of microfinance institutions: does loan delinquency play a mediating role

The trade-off between outreach and sustainability of microfinance institutions: does loan delinquency play a mediating role

Effects of Interest Rate Ceiling on Sustainability of Microfinance Institutions: Lessons from Tanzania

This study explores the effects of an interest rate ceiling on the sustainability of Microfinance Institutions (MFIs). Based on qualitative research which entailed collection of online data from 53 respondents and in-depth face-to-face interviews with 10 MFI practitioners in Tanzania, it is evident that an interest rate ceiling interferes with competitive market forces. Given that MFIs vary in size, operational capacity, customer segment and business model, applying a single blanket interest rate leads to capital and credit diversion, hidden non-interest charges, the emergence of informal lenders and a black market, the withholding of credit from risky markets and the closure of some MFIs. Accordingly, an interest rate ceiling impairs the sustainability of MFIs and reduces financial inclusion. The study demonstrates that while competition moderate interest rates, non-interest measures can be applied to protect customers from being exploited by unscrupulous lenders.

Factors Impacting Sustainability of Microfinance Institutions

Factors Impacting Sustainability of Microfinance Institutions

Research into microfinance and ICTs: A bibliometric analysis

Information and communication technologies (ICTs) play an ever-increasing role in improving the efficiency, profitability, and sustainability of microfinance institutions. This paper aims to assess the role of ICTs in the microfinance industry by systematically reviewing the literature with bibliometric methods. In this research, a total of 347 samples (from 1998 to 2021) were selected from the Web of Science database according to the guideline of the systematic review. By performing descriptive statistical analysis, the contributing institutions, countries, journals, authors, as well as influential publications were identified. In the co-citation and co-word analysis section, three primary types of visualization—cluster views, timezone views and timeline viewswere all presented through CiteSpace. It turns out that crowdfunding, P2P lending and mobile banking have been the favorite topics. A central issue is the role of these platforms in entrepreneurship. We also proposed that applying fintech, especially blockchain and other emerging technologies, to promote financial inclusion is one of the future research trends. The findings of this study will be of interest to researchers, managers, policymakers, and evaluators and facilitate them to make well-informed decisions in their respective domains.

Governance and Organisational Flexibility at the Junction of African MFIs’ Sustainability Issues

It is unfortunate to acknowledge the phenomenon of Africa’s Microfinance Institutions (MFIs) bankruptcies only a few years after their creation. The instability of technical, economic, commercial and cultural environments, which play an important role on MFI’s sustainability, explains this recurrence of bankruptcies. These crises, both in West and Central Africa, have highlighted the role of organisational flexibility in MFIs’ sustainability. This paper aims at examining the effects of flexible governance that contribute to Economic and Monetary Community of Central Africa’s (EMCCA) MFIs sustainability. In this regard, we have chosen qualitative method which is a multi-modal research including a naturalist interpretation approach emphasising on entities’ qualities. We have carried out semi-directive interviews among (14) MFIs in Cameroon, Congo, Gabon and Chad. We have made use of data collected with NVIVO to carry out content analysis process. The study’s results show that EMCCA’s MFIs sustainability is a matter of the flexibility of organisational dynamism of governance mechanisms, innovations and technological opportunities.

Factors Impacting Sustainability of Microfinance Institutions

Factors Impacting Sustainability of Microfinance Institutions

Sources of funding and sustainability of Microfinance institutions in Cameroon: an explanation using the pecking order theory

Sources of funding and sustainability of Microfinance institutions in Cameroon: an explanation using the pecking order theory

Credit expansion and financial sustainability of microfinance institutions: A generalized method of moments panel data analysis

This study examines the nexus between credit expansion and the financial sustainability of microfinance institutions (MFIs) in Sub-Saharan Africa (SSA). The study also examines the interaction effects of credit expansion and interest rate/portfolio quality on MFI sustainability. The study relies on panel dataset of 136 MFIs across 31 SSA countries covering the year 2004 to 2018 and applies the Arellano-Bover/Blundell-Bond two-step Generalized Method of Moments (GMM) Windmeijer bias-corrected standard errors to analyze the data. The results establish that credit expansion matters in MFI financial sustainability. Specifically, the study uncovers that while the size of the loan portfolio and loan intensity are positively associated with MFI sustainability, the economic significance of loan intensity is higher. On the other hand, the other credit expansion proxy “credit growth” does not predict the sustainability of MFIs. The results also reveal that the loan intensity and potfolio at risk have interaction effects on MFI sustainability. However, the study fails to support an asymmetric effect of credit expansion on financial sustainability depending on the interest rate charged on loans. The study uses three proxies for credit expansion and gives useful insights for policymakers and/or MFI managers that loan intensity should be the main target of MFIs if the goal is to attain financial self-sufficiency. The study also examines the interaction effects of credit expansion and interest rate/portfolio quality on MFI sustainability and sheds light on what is expected from MFI managers to expand credit access to the poor without compromising sustainability.

Financing Practices on Sustainability of Microfinance Institutions in Nakuru County, Kenya

The study aimed at financing practices on the sustainability of microfinance institutions in Nakuru County. A Census of microfinance institutions in Nakuru County was carried out. The objectives of this research were: To establish the effect of group financing on the sustainability of microfinance institutions in Nakuru County; to evaluate the effect of debt financing on the sustainability of Microfinance in Nakuru County, To evaluate the effect of financial securities on the sustainability of microfinance institutions in Nakuru County, and To determine the effect of loan performance on the financial sustainability of Microfinance institutions in Nakuru County It analyzed how financing practices lead to the sustainability of microfinance institutions in the county. A sampling design was used because it is the most efficient for this kind of study. The target population was the microfinance institutions that practice financing services and lead to the sustainability of Microfinance institutions in Kenya. The research study used judgmental sampling because the population under study was large, and the sample size was Finance respondents in 5 registered Microfinance institutions in Nakuru County in Kenya. The data collection instruments were questionnaires for the respondents to fill in primary data and micro-financial reports, including published financial statements in collecting secondary data. The coded data were entered into the Statistical Package for Social Sciences (SPSS) Version 24 analytical tool for analysis. Descriptive statistics were done using mean, percentages, and standard deviation. Inferential statistics involved correlation and regression. Correlation results showed a weak to moderate relationship between the independent and dependent variables. The study thus recommends that the MFIs consider and improve group financing, debt financing, financial securities, and loan performance to increase their sustainability. The findings of the study are essential for policymakers and institutions, especially those in the microfinance industry, to develop a policy framework that will take care of issues like improving service delivery to end users by microfinance institutions in Kenya.

Social Performance Management and Sustainability of Microfinance Institutions

Social performance management refers to the ability to achieve social goals by putting customers at the center of strategy and operations in microfinance institutions. The social performance of a microfinance institution means its effectiveness in achieving social goals and creating value for customers. This is just one aspect of social performance management. Social performance management examines the whole process through which an effect occurs. In the present study, social performance is considered as an assessment of social goals such as targeting the poor and marginalized, an adaptation of services that deliver economic benefits to customers, and the environment, and employees to improve social responsibility towards customers and the community. The overall performance of microfinance institutions contributes to the long-term sustainability of the organization. Sustainability of microfinance institutions means the long-term continuation of the microfinance program, which includes continuity of financial and non-financial services of microfinance institutions. The sustainability of microfinance institutions are measured by using a portfolio, performance, financial management, and profit-to-financial ratio. In the present study, the sustainability of microfinance considered as a long-term continuation of the program that benefits all stakeholders in the microfinance sector and society. Most microfinance institutions devote their efforts to achieving the social and financial goals of the organization. Social performance facilitates progress in achieving the social goals of microfinance institutions. As such, sustainability is a dynamic concept that aims to meet the expected cost of all programs and return on investment.

What are the determining factors of the sustainability of microfinance institutions in the MENA region : a theoretical study and an empirical investigation for the case of 22 MFIs

Microfinance is considered a better solution for the fight against poverty. It allows the integration of the excluded into productive activity. The current challenge for MFIs (microfinance institutions) is to seek their durability and sustainability, in order to be able to achieve their objective. Sustainability can be defined as the ability of institutions to maintain the sustainability of their actions. It is assessed through three dimensions, namely, financial autonomy, institutional and social viability, as well as technical efficiency. The objective of this work is to identify the main determinants of the sustainability of MFIs. We will, in this regard, conduct a case study of 22 MFIs in the MENA (Middle East and North Africa) region. Keywords : Microfinance, Sustainability, MFIs, MENA region.