Sustainability of Microfinance Institutions in Thailand

Christopher Gan () and Wittawat Hemtanon ()
Additional contact information
Christopher Gan: Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University, New Zealand
Wittawat Hemtanon: Faculty of Economics, Prince of Songkla University, Songkhla, Thailand

Asian Journal of Agriculture and Development, 2022, vol. 19, issue 1, 77-90

Abstract: Microfinance programs play a vital role in poverty alleviation in developing countries; however, most microfinance institutions (MFIs) face the challenge of maintaining financial sustainability. While several studies have investigated factors affecting MFI financial sustainability, only a few focus on MFIs in Thailand. This paper uses the random effect model to study the determinants of Thai MFIs’ financial sustainability. Results show that sustainability is affected by the efficiency of Thai MFI staff members in managing borrowers and the MFIs’ ability to use their short-term assets to generate cash or revenue. Moreover, Thai MFIs do not benefit from economies of scale and do not reach the very poor households. This study recommends that MFIs should ensure that their social and financial goals are adequately balanced. It proposes that MFIs use a mixed approach: follow profit maximization principles and embrace technology to minimize operational costs.

Keywords: financial sustainability; microfinance institutions; financial performance; panel data estimation (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://ajad.searca.org/article?p=1723 (text/html)

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:sag:seajad:v:19:y:2022:i:1:p:77-90

Access Statistics for this article

More articles in Asian Journal of Agriculture and Development from Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) Contact information at EDIRC.
Bibliographic data for series maintained by Benedict A. Juliano ().