A causality approach in the analysis of the trade-off between financial sustainability and outreach

L. Arturo Bernal Ponce, Adriana Ramírez Rocha and Ricardo Pérez Navarro

Finance Research Letters, 2021, vol. 42, issue C

Abstract: This study reviews the causality between financial sustainability and depth of outreach for microfinance institutions in six regions. We performed a panel unit root analysis, revealing the data's stationarity both individually and regionally. The Granger causality analysis showed that Outreach, adjusted for the poorest 20%, causes financial sustainability in South Asia and Latin America. The research also proved bidirectional causality between Outreach and financial sustainability in East Asia and the Pacific. Our results imply an improvement in the model specification when analyzing the trade-off between financial sustainability and outreach in MFIs of those regions, which is useful for forecasting purposes.

Keywords: Econometric methodology; Causality; Microfinance; Poverty alleviation; Firm goal; Firm profit (search for similar items in EconPapers)
JEL-codes: C18 C19 G21 I38 L21 L25 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:42:y:2021:i:c:s1544612321000015

DOI: 10.1016/j.frl.2021.101920

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