Trade-off between financial sustainability and outreach of microfinance institutions

Mira Nurmakhanova (), Gavin Kretzschmar and Hassouna Fedhila

Eurasian Economic Review, 2015, vol. 5, issue 2, 250 pages

Abstract: Microfinance institutions (MFIs) offer banking services to poor customers who have no access to the traditional financial sector. However, recent developments in the microfinance industry have increased focus on financial sustainability of MFIs therefore shifting focus from their social mission (outreach). Previous studies examine the factors affecting both financial sustainability and outreach of MFIs in separate models without taking into account the possible link between them. On this basis we propose a comprehensive model which includes both ‘outreach’ and ‘financial sustainability’ as endogenous variables and allows for possible link between them. Our results show that focusing on financial sustainability does not necessarily hurt the depth and breadth of outreach. Copyright Eurasia Business and Economics Society 2015

Keywords: Microfinance; Outreach; Financial sustainability; G21; G28; C11; C34; C51 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (16)

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DOI: 10.1007/s40822-015-0016-7

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