Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions

This study investigates the role of different financing sources on the financial sustainability of Microfinance Institutions (MFIs) using a combination of efficiency estimation techniques and regression analysis. Specifically, this study utilizes the Data Envelopment Analysis (DEA) method to measure...

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Published in:Lecture Notes in Networks and Systems
Main Author: Ahamad S.; Reaz M.T.; Chowdhury M.F.; Billah M.; Joarder M.H.R.; Uddin M.
Format: Conference paper
Language:English
Published: Springer Science and Business Media Deutschland GmbH 2024
Online Access:https://www.scopus.com/inward/record.uri?eid=2-s2.0-85202186117&doi=10.1007%2f978-3-031-67431-0_3&partnerID=40&md5=c5a632a65c74b24a4da810ae6ee1b362
id 2-s2.0-85202186117
spelling 2-s2.0-85202186117
Ahamad S.; Reaz M.T.; Chowdhury M.F.; Billah M.; Joarder M.H.R.; Uddin M.
Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
2024
Lecture Notes in Networks and Systems
1083 LNNS

10.1007/978-3-031-67431-0_3
https://www.scopus.com/inward/record.uri?eid=2-s2.0-85202186117&doi=10.1007%2f978-3-031-67431-0_3&partnerID=40&md5=c5a632a65c74b24a4da810ae6ee1b362
This study investigates the role of different financing sources on the financial sustainability of Microfinance Institutions (MFIs) using a combination of efficiency estimation techniques and regression analysis. Specifically, this study utilizes the Data Envelopment Analysis (DEA) method to measure MFIs’ efficiency levels, and the Generalized Method of Moments (GMM) estimator to assess the effects of different financing sources on financial sustainability. This study employs a panel dataset comprising 661 MFIs from 86 nations, covering the year 2010–2018. The findings reveal that, overall, MFIs exhibit intermediate levels of efficiency. Furthermore, the regression results demonstrate that retained earnings and equity are positively associated with financial efficiency, indicating that MFIs that rely more heavily on these sources tend to be more financially stable. The practical significance of these findings is significant for both policy makers and regulators in the microfinance industry. The study suggests that funding strategies must be carefully considered to improve MFIs’ efficiency and sustainability. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024.
Springer Science and Business Media Deutschland GmbH
23673370
English
Conference paper

author Ahamad S.; Reaz M.T.; Chowdhury M.F.; Billah M.; Joarder M.H.R.; Uddin M.
spellingShingle Ahamad S.; Reaz M.T.; Chowdhury M.F.; Billah M.; Joarder M.H.R.; Uddin M.
Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
author_facet Ahamad S.; Reaz M.T.; Chowdhury M.F.; Billah M.; Joarder M.H.R.; Uddin M.
author_sort Ahamad S.; Reaz M.T.; Chowdhury M.F.; Billah M.; Joarder M.H.R.; Uddin M.
title Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
title_short Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
title_full Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
title_fullStr Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
title_full_unstemmed Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
title_sort Optimal Financing Choice for Institutional Sustainability: Evidence from a Global Study on Microfinance Institutions
publishDate 2024
container_title Lecture Notes in Networks and Systems
container_volume 1083 LNNS
container_issue
doi_str_mv 10.1007/978-3-031-67431-0_3
url https://www.scopus.com/inward/record.uri?eid=2-s2.0-85202186117&doi=10.1007%2f978-3-031-67431-0_3&partnerID=40&md5=c5a632a65c74b24a4da810ae6ee1b362
description This study investigates the role of different financing sources on the financial sustainability of Microfinance Institutions (MFIs) using a combination of efficiency estimation techniques and regression analysis. Specifically, this study utilizes the Data Envelopment Analysis (DEA) method to measure MFIs’ efficiency levels, and the Generalized Method of Moments (GMM) estimator to assess the effects of different financing sources on financial sustainability. This study employs a panel dataset comprising 661 MFIs from 86 nations, covering the year 2010–2018. The findings reveal that, overall, MFIs exhibit intermediate levels of efficiency. Furthermore, the regression results demonstrate that retained earnings and equity are positively associated with financial efficiency, indicating that MFIs that rely more heavily on these sources tend to be more financially stable. The practical significance of these findings is significant for both policy makers and regulators in the microfinance industry. The study suggests that funding strategies must be carefully considered to improve MFIs’ efficiency and sustainability. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024.
publisher Springer Science and Business Media Deutschland GmbH
issn 23673370
language English
format Conference paper
accesstype
record_format scopus
collection Scopus
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