Factors Impacting Sustainability of Microfinance Institutions

Most Microfinance and Group Lending projects in India are unprofitable. Formal financial institutions are wary of lending money to micro-borrowers due to a lack of collateral and creditworthiness. Sustainability has been made possible by the virtues of social capital. No research exists on the impact of other parameters, such as portfolio risk and loan delinquency, on the sustainability of microfinance institutions in India. There is a lack of research on the factors influencing Microfinance institutions' operational and financial self-sufficiency. The data for the study came from the Market Mix World bank database. A panel is created with data from 2008 to 2019. For the analysis, theoretical lens of Resource-Based View and Dynamic Punctuated Equilibrium were used for analysis. This study calculated operational self-sufficiency using average loan GDP per capita, active, and female borrowers. The number of female borrowers and Portfolios at Risk negatively impacts the financial sustainability of Microfinance institutions globally, except in the MENA institutions.