EconPapers    
Economics at your fingertips  
 

Sustainability index of micro finance institutions (MFIs) and contributory factors

Disha Bhanot and Varadraj Bapat

International Journal of Social Economics, 2015, vol. 42, issue 4, 387-403

Abstract: Purpose - – The purpose of this paper is to conceptualize the sustainability of micro finance institutions (MFIs) in a holistic manner. The idea is to create an index of sustainability for MFIs which includes financial and outreach aspects of sustainability. Further, it also discerns the factors which contribute to high (low) sustainability scores of MFIs. Design/methodology/approach - – Data on Indian MFIs was collected from Microfinance Information Exchange database. Using the technique of order preference by similarity to ideal solution (TOPSIS), an Index of sustainability is built by aggregating multiple indicators (operational self-sufficiency ratio, the average loan balance per borrower and the number of active borrowers) to arrive at composite sustainability score of MFIs. Contributory factors of sustainability were identified using a multiple regression model. Findings - – The sustainability score for MFIs ranges from a maximum score of 0.80 to a minimum of 0.26. Gross loan portfolio, No. of borrower per staff member, portfolio at risk>30 days and return on assets, are significant contributors to sustainability scores of Indian MFIs. Practical implications - – The index of sustainability is a useful tool to rank the MFIs on a multi-dimensional construct of sustainability. The study also helps to unravel factors that significantly contribute to sustainability of Indian MFIs. Originality/value - – This study is novel in its attempt to measure sustainability in a holistic fashion by focussing not just on the financial performance of the MFI but also on outreach dimensions. It is also unique in its approach to adopt a multi criteria decision-making technique of TOPSIS to measure sustainability of Indian MFIs.

Keywords: Sustainability; Microcredit; TOPSIS; Microfinance institutions; Sustainability index (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/IJSE-01-2014 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijsepp:v:42:y:2015:i:4:p:387-403

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldinsight.com/ijse.htm

Access Statistics for this article

International Journal of Social Economics is currently edited by Dr Colin Tyler and James Connelly

More articles in International Journal of Social Economics from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().

 
Page updated 2018-06-23
Handle: RePEc:eme:ijsepp:v:42:y:2015:i:4:p:387-403