Double bottom line commitments of microfinance: evidence from Indian institutions

Purpose - The purpose of the paper is to confirm the adherence of double bottom line objectives by the microfinance institutions (MFIs) of India and, further, to identify the causal factors that work out their double bottom line commitments. Design/methodology/approach - The study uses an empirical data set for the period of 10 years, i.e. from 2005–2006 to 2014–2015, gathered fromwww.mixmarket.org. It follows an exploratory approach with overall and segmented performance analysis. Further, a panel data regression model is applied to identify the causal factors of double bottom line. Findings - The study finds that MFIs are adhering to the notion of double bottom line. The segregated analysis does not give any solid indications of trade-off. The mature and small MFIs are found to be better in attaining social objective but the new and large are better in sustainability. The non-governmental organization (NGO) category is more committed to the double bottom line than the non-NGO. The causal analysis could not show any relationship between financial performance and outreach. Though age and outreach size show relationships with small loan sizes, they do not influence sustainability. The operating and financial expenses along with portfolio quality are found to be the main causal variables of sustainability. Practical implications - There are indications for the policy makers to frame regulations and prepare a roadmap for the mature and the large MFIs. This would help them adhere to the double bottom line, which would further streamline the operations of the MFIs in the long run. Containing operating expenses and controlling the asset quality still remain to be the challenges which need to be addressed with proper policy guidelines. Originality/value - The analysis of the study focuses on industry classifications, which make it more intriguing in nature given the fact of the varied features like age, legal status and outreach. India being the largest microfinance market in the world has limited studies. Most of the studies in double bottom line are based on a cross-country analysis, which generalizes the individual characteristics. The study fills this gap and adds to the understanding of the double bottom line commitments in the Indian context.