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Determinants of Sustainability of the Micro-Finance Sector in India

Author

Listed:
  • Sodi Jasbir Kaur

    (H.R. College of Commerce and Economics, India)

  • Jehangir Bharucha

    (H.R. College of Commerce and Economics, India)

Abstract

India takes pride in the largest microfinance programme in the world. This paper aims to fill a void by exploiting data from third party agencies to study the efficiency parameters influencing financial health of MFIs (microfinance institutions). The authors use the “goodness of fit” test to find out the important factors determining the performance capabilities of microfinance institutions. Performance parameters OER (operating efficiency ratio), OSS (operational self sufficiency), ROE (return on equity), and ROA (return on assets) are tested with financial and social performance indicators to understand if any correlation exists. The study finds that the only significant factor affecting sustainability of MFIs is OER in India. OSS, ROE, and ROA had no significant impact on sustainability of these MFIs during the study period. Understanding the viability of microfinance and the factors that affect it can guide the design of policies that ensure benefits for the poor.

Suggested Citation

  • Sodi Jasbir Kaur & Jehangir Bharucha, 2023. "Determinants of Sustainability of the Micro-Finance Sector in India," International Journal of Asian Business and Information Management (IJABIM), IGI Global, vol. 14(1), pages 1-11, January.
    • Handle: RePEc:igg:jabim0:v:14:y:2023:i:1:p:1-11
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    References listed on IDEAS

    as
    1. Amit Mittal & Ruchi Mittal, 2008. "Store Choice in the Emerging Indian Apparel Retail Market: an Empirical Analysis," IBSU Scientific Journal, International Black Sea University, vol. 2(2), pages 21-46.
    2. B.B. Goyal & Meghna Aggarwal, 2009. "Organized Retailing In India- An Empirical Study Of Appropriate Formats And Expected Trends," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 3(2), pages 77-83.
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