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Evaluating the Sustainability of Microfinance Institutions Considering Macro-Environmental Factors: A Cross-Country Study

Wei Xu (), Hongyong Fu () and Huanpeng Liu ()
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Wei Xu: School of Business, Jiangnan University, Wuxi 214122, China
Hongyong Fu: China Research Institute of Enterprise Governed by Law, Southwest University of Political Science and Law, Chongqing 401120, China
Huanpeng Liu: School of Economic, Qufu Normal University, Rizhao 276825, China

Sustainability, 2019, vol. 11, issue 21, 1-22

Abstract: Microfinance institutions (MFIs) have attracted great attention, due to their significant role in poverty reduction. Given the features of MFIs, this paper proposes a novel hybrid model of soft set theory, and an improved order preference by similarity to ideal solution (HMSIT) to evaluate the sustainability of MFIs, considering accounting ratios, corporate governance factors, and macro-environmental factors, from a cross-country perspective. This setting enables the examination of the role of macro-environmental factors in the sustainability of MFIs. For this purpose, soft set theory is adopted to select optimal criteria. An improved order preference by similarity to ideal solution method, in which the weight of each criterion is determined by soft set theory, is proposed to rank the sustainability of MFIs. This algorithm enables HMSIT to make full use of various types of information. The case study uses cross-country samples. Results indicate that macro-environmental factors are significant in evaluating the sustainability of MFIs from a cross-country perspective. Particularly, they can play a key role in distinguishing MFIs with low sustainability. The results also indicate that HMSIT has strong robustness. Ranked results, produced from the proposed HMSIT are reliable enough to provide some managerial suggestions for MFIs and help stakeholders make decisions.

Keywords: microfinance institution; sustainability; macro-environmental factors; soft set; TOPSIS (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2019
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