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Microfinance institutions’ operational self-sufficiency in sub-Saharan Africa: empirical evidence

Laxmi Remer () and Hanna Kattilakoski
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Laxmi Remer: CBS International Business School
Hanna Kattilakoski: CBS International Business School

International Journal of Corporate Social Responsibility, 2021, vol. 6, issue 1, 1-12

Abstract: Abstract The topic of financial sustainability in microfinance institutions has become more important as an increasing number of Microfinance Institutions (MFIs) seek operational self-sufficiency, which translates into financial sustainability. This study aims to identify factors that drive operational self-sufficiency in microfinance institutions. To accomplish this, 416 MFIs in sub-Saharan Africa are studied and several drivers for operational self-sufficiency are empirically analyzed. Results indicate that these drivers are return on assets, and the ratios total expenses/assets and financial revenues/assets. The results imply that MFIs should encourage cost-management measures. They also reveal that there may not be a significant tradeoff in self-sufficiency and outreach. These findings will enable microfinance institutions worldwide to sharpen their institutional capabilities to achieve operational self-sufficiency and also provide policymakers with more focused tools to assist industry development.

Keywords: MFI; Microfinance institution; Operational self-sufficiency; Financial sustainability; Outreach; Financial inclusion; Africa (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1186/s40991-021-00059-5

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International Journal of Corporate Social Responsibility is currently edited by René Schmidpeter and Samuel O. Idowu

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