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Financial Sustainability of Microfinance Institutions at Growth Stage: Do Lending Terms Matter?

Financial Sustainability of Microfinance Institutions at Growth Stage: Do Lending Terms Matter? AbstractThe financial sustainability of microfinance institutions (mfi s) is crucial if their benefits are to be enjoyed in the long run. This study investigated the determinants of mfi s’ financial sustainability at growth stage. The study aimed to address the following questions: are factors influencing financial sustainability at maturity equally important at growth stage? What influence do lending terms have on financial sustainability at growth stage? The study used panel regression models and four-year survey data from 106 rural mfi s in Tanzania. Decomposition of lending types was adopted to unveil the contribution of lending terms to financial sustainability. We found that most factors influencing financial sustainability at maturity stage are equally important in influencing sustainability at growth stage. In addition, two factors appear to affect financial sustainability at growth stage only. Moreover, lending terms matter in determining financial sustainability at growth stage. The study provides insights on how lending terms can be used to influence financial sustainability at growth stage. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Afrika Focus Brill

Financial Sustainability of Microfinance Institutions at Growth Stage: Do Lending Terms Matter?

Afrika Focus , Volume 34 (1): 25 – Jun 9, 2021

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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
0772-084X
eISSN
2031-356X
DOI
10.1163/2031356x-34010005
Publisher site
See Article on Publisher Site

Abstract

AbstractThe financial sustainability of microfinance institutions (mfi s) is crucial if their benefits are to be enjoyed in the long run. This study investigated the determinants of mfi s’ financial sustainability at growth stage. The study aimed to address the following questions: are factors influencing financial sustainability at maturity equally important at growth stage? What influence do lending terms have on financial sustainability at growth stage? The study used panel regression models and four-year survey data from 106 rural mfi s in Tanzania. Decomposition of lending types was adopted to unveil the contribution of lending terms to financial sustainability. We found that most factors influencing financial sustainability at maturity stage are equally important in influencing sustainability at growth stage. In addition, two factors appear to affect financial sustainability at growth stage only. Moreover, lending terms matter in determining financial sustainability at growth stage. The study provides insights on how lending terms can be used to influence financial sustainability at growth stage.

Journal

Afrika FocusBrill

Published: Jun 9, 2021

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