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Probability of Sustainability and Social Outreach of Microfinance Institutions

Shakil Quayes ()
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Shakil Quayes: University of Massachusetts Lowell

Economics Bulletin, 2019, vol. 39, issue 2, 1047-1056

Abstract: Prior studies have shown empirical evidence of either a tradeoff or a complementary relationship between financial performance and social outreach of a microfinance institution (MFI). To analyze this relationship, I consider the probability of attaining financial sustainability to be a more appropriate predictor of social outreach efforts of an MFI, than standard measures of financial performance. Using an unbalanced panel of 1210 MFIs over a period of 9 years, I estimate the probability of attaining financial sustainability for an individual MFI, utilizing a probit model. Next, I use the predicted probability and other control variables, to explain the variability of social outreach. The results of our study show that the better probability of financial sustainability has a positive effect on depth of outreach, breadth of outreach, and outreach to women.

Keywords: Social Outreach; Financial Sustainability; Microfinance Institution (search for similar items in EconPapers)
JEL-codes: O1 G2 (search for similar items in EconPapers)
Date: 2019-05-02
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