Study On Influence Factors Of The Sustainable Development Of Microfinance Institutions

Microfinance refers to the financial services system that is established specifically for thepoor, low-income peoples and micro-enterprises, and it includes microcredit, savings,remittances and micro-insurance. Microfinance institutions (MFIs) are dedicated to providingpoor people financial services and improving their income and living conditions, and thenmake them out of poverty. In2010, the microfinance crisis in Andhra Pradesh, India attractedmicrofinance institutions and academic’s attention over the world. More and more researchersbegan to pay attention and analyze the sustainable development of microfinance institutions.In this paper, I focus on the issues of sustainable development of MFIs, explain themeaning and measure index of sustainable development of MFIs, and analyze the micro andmacro factors that affect the sustainable development. The paper takes219developed MFIsover the world for the study, selects the operational self-sustainability as the dependentvariable, and establishes a panel data analysis model to analyze the impact of micro variablesand macro indicators of the economic environment on the sustainability of MFIs. In the end,the paper get the following empirical results: the gross loan portfolio to total assets, actualyield on gross portfolio, foreign direct investment to GDP, GDP growth rates and theproportion of rural population have a significant positive correlation with the operationalself-sustainability of MFIs, while total expenses to total assets ratio, portfolio at risk over30days and the credit depth of information index have a significant negative correlation with theoperational self-sustainability of MFIs. Finally, according to the empirical results, the paperput forward some micro and macro recommendations that in favor of the sustainabledevelopment of MFIs.