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Today, the sustainability and outreach of microfinance institutions (MFIs) are crucial to the success of microfinance and the sector’s potential to make a lasting impact. The ability of MFIs to operate financially well without sacrificing their social goals has come under scrutiny. This study aims to identify the kind of relationships between the two objectives of MFIs in Ethiopia.

This study investigated the association between the outreach and financial sustainability of Ethiopian MFIs from the years 2012 to 2021 using a balanced set of panel data. The study used secondary data and employed a descriptive research design and a quantitative research approach. To this end, random and fixed effects estimation models, as well as three-stage least squares, with the model of seemingly unrelated regression (SUR) are used.

According to the study, outreach performance enables MFIs to achieve sustainability/financial performance. On the other side, MFI that are financially sound improve social performance. There was therefore no trade-off between the two objectives.

As Ethiopia’s microfinance sector shifts away from government and non-government backing and toward commercialization, such research is crucial. This aspect of the Ethiopian microfinance industry has gotten little consideration in research. The SUR model was used in the study together with random and fixed effect estimators, and the most reliable estimation result was chosen based on the necessary tests.

Microfinance institutions (MFIs) play an important role in economic development, with the dual objectives of social outreach and financial self-sufficiency. The purpose of this study is to examine the influence of organizational structure and variations in legal systems on the MFI dual performance goals.

Using a sample that includes 1,518 MFIs from 105 different countries over a period of 20 years, this study analyzes the data by applying a model that includes six categories of organizational structures and variations of legal systems, including both civil and common law, with accounting performance measures for the dependent variables.

The analyses provide robust results indicating that MFIs structured as non-governmental organizations (NGOs) have better social outreach than all other types of MFIs and exhibit better financial performance than MFIs registered as commercial banks or credit unions. Legal systems also played a role in MFI effectiveness.

Given the increasing importance of MFIs on economic development globally, this study has relevance on how the impact of MFI structural characteristics and macro-level influences on their dual performance criteria can be translated into management approaches and governance policies that can increase the effectiveness of these dual (i.e. social and financial) goals.

This study is more comprehensive than prior research in addressing the influence of organizational structures of MFIs and legal systems on MFI dual mission, namely, its financial performance and social outreach, thereby increasing our understanding of policy implications in sustaining the MFI’s developmental role.

This study investigates the role of national culture between outreach and sustainability of microfinance institutions (MFIs). Despite microfinance's deep embeddedness in cultural contexts, research on the influence of national culture on MFI performance is rather sparse. This paper seeks to fill this gap and, based on cross-country microfinance data, attempts to explain the outreach-sustainability relationship in reference to cultural factors.

An unbalanced panel, consisting of 5,741 MFI-year observations of 1,232 MFIs from 43 countries in six regions, is drawn from the Microfinance Information Exchange (MIX) Market database. Two different econometric models are tested. Model 1 estimates the direct effect of outreach on sustainability, using a fixed-effects estimator. Model 2 examines the moderation effect of national culture on outreach-sustainability relationship, employing correlated random effects approach.

The results show that depth of outreach and financial sustainability of MFIs are negatively related, and the relationship is moderated by national culture. Power distance and uncertainty avoidance positively moderate the outreach-sustainability relationship, whereas individualism and masculinity negatively moderate the relationship.

The findings suggest that the national culture where MFIs are located plays an important contingent role in their performance and that the magnitude of the trade-off effect varies from culture to culture. The research thus provides further insight in the trade-off debate and contributes to literatures of both microfinance and cross-cultural management.

With the ongoing transformation of the microfinance sector, questions have been raised on the ability of microfinance institutions (MFIs) to perform financially well without compromising with their social objectives. The current study attempts to analyse the social and financial performance of Indian MFIs with an objective to find the kind of relationship between these two objectives.

The dynamic framework of simultaneous equations model is used to find the nature of the relationship which exists between social and financial performance of Indian MFIs.

The study finds that depth of outreach enables MFIs to achieve financial sustainability. On the other hand, financially strong MFI lend more as reflected by an increase in their average loan size.

Many MFIs still receive subsidies to support their operations. Ideally, adjustments should be made to remove the effect of such subsidies on their cost. However, due to non-availability of data, the study fails to make any adjustment for the subsidies.

The presence of a complementary relationship between social and financial performance in the Indian microfinance sector is quite encouraging for the policymakers during the current time when the sector is becoming less dependent on subsidies. However, the recent upsurge in the average loan size requires attention.

The findings suggest that MFIs can achieve financial sustainability while targeting poor clients. This indicates that MFIs can perform socially good along with their financial performance.

Such study is vital when the Indian microfinance sector is moving away from subsidies to become self-reliant and commercialised. Few studies have focused on this aspect of Indian microfinance sector.

The aim of this study is to investigate the effect of income and geographic diversification on the double bottom line of microfinance institutions (MFIs) in Middle East and North Africa (MENA) countries where conventional and Islamic MFIs coexist. The idea is to explore whether diversification impacts MFIs' financial performance and outreach differ for Islamic microfinance.

The authors test the effect of diversification and business models of MFIs on their performance and poverty outreach. The authors’ data set is an unbalanced panel sample of 81 (Islamic and conventional) MFIs in MENA countries covering 1999–2018, comprising 743 MFI-year observations.

The authors find that increasing income diversification in microfinance and focusing on rural areas decreases the financial performance of MFIs in MENA countries. Islamic MFIs benefit from income diversification by increasing their financial performance. The results provide evidence of a nonlinear relationship between income diversification and the financial performance of MFIs. Although conventional MFIs improve their depth of outreach by diversifying their income, Islamic MFIs have a lower breadth of outreach because they show a higher degree of income diversification.

This research contributes to the ongoing debate of whether MFIs should focus on or diversify their services to Islamic microfinance. Therefore, the findings of this study are practically crucial for MFIs' stakeholders to understand the contribution of diversification strategies in improving the Islamic MFIs to achieve both financial and social objectives.

To the best of the authors’ knowledge, it is the first research that addresses the impact of diversification strategies in Islamic microfinance. Additionally, using a panel data set of conventional and Islamic MFIs in MENA countries spanning 1999–2018, this study provides empirical evidence on the diversification versus focus issue from the microfinance industry and the subset of Islamic microfinance.

Examining multilevel effects of financial and social performance of microfinance institutions (MFIs), the authors aim to investigate microfinance mission drift from the trend effect. The authors also seek to move the literature forward by decomposing the performance variance at different levels and examining whether and how much each level of analysis matters.

Growth curve modeling and variance decomposition analysis were conducted using a dataset consisting of 17,953 observations of 2,902 microfinance institutions in 122 countries from 1999 to 2017.

The study's result shows no evidence of mission drift in the microfinance industry. While MFIs improve their economic returns, they also increase the depth of outreach. In addition, firm-level heterogeneity is the dominant effect which explains 44% of the variance in microfinance financial performance (ROA) and 39% of the variance in social performance (Depth of outreach). The country-level is more critical in explaining financial performance (ROA) than social performance (Depth of outreach), accounting for 11 and 32% of the total variance, respectively. In particular, the interplay between the country-level and organizational-category level accounts for 9 and 11% of the total variance in financial performance (ROA) and social performance (Depth of outreach), respectively.

This study’s multilevel analysis of microfinance performances moves the literature forward by responding to the debate on microfinance mission drift and providing a comprehensive overview of both social and financial performance. By focusing on the trend effect, the result of our models shows that MFIs improve both financial and social performance to fulfill dual missions. The microfinance business model becomes sustainable over time. The study's results of country effect and its interaction effect with different organizational categories reveal the prominence of a good policy design on MFI's mission fulfillment.

This study aims to compare the nexus between donations to Islamic and conventional microfinance institutions (MFIs) and their credit risk, financial performance and social outreach.

The authors use fixed effects and two-step system generalized methods of moments models with internal instrumentation. The analysis is conducted on an international sample of 1,519 MFIs in 55 countries during 1999–2019.

Islamic MFIs receiving greater donations experience an increase in credit risk, whereas the opposite occurs among their conventional counterparts. Donations are associated with an improvement in the depth of outreach of Islamic MFIs, allowing them to serve a poorer client base, despite a simultaneous decline in the breadth of their outreach. On the other hand, donations improve both the depth and breadth of conventional MFIs outreach. Donations also exhibit a positive relation with productivity, efficiency and sustainability in conventional MFIs.

This paper addresses a gap in the literature on Islamic MFIs and their use of donor funds by examining how donations contribute to the quality of their credit portfolios, financial performance and social outreach. This study used Ahmed’s (2012, 2017, 2020, 2021) total factor productivity model to capture the impact of donations on the performance of MFIs.

Donations are found to contribute to positive financial inclusion outcomes for both Islamic and conventional MFIs, a promising implication for society and donors alike.

This paper addresses a gap in the academic literature on Islamic MFIs and their use of donor funds by examining how donations contribute to the quality of their credit portfolios, financial performance and social outreach.

The purpose of this study was to conduct a scientometric analysis of the body of literature contained in international peer‐reviewed journals, university publications, reports of development organizations and conference publications on the performance management of the microfinance institutions.

A total of 71 research papers (1995‐2010) published in international peer‐reviewed journals, reports of developmental organizations, university reports and international conference publications, which aim to provide insights into the assessment of the microfinance institutions, was reviewed. The review was done along different parameters, namely financial performance, social performance, outreach, sustainability, efficiency, productivity, institutional characteristics and governance.

Based on the literature review, a new conceptual model is proposed that focuses on the overall performance of the MFIs. The study also documents the various dimensions of the performance measurement of the MFIs done so far. It is expected that this study would help turn the attention of microfinance researchers, microfinance practitioners, and various rating agencies to the various dimensions affecting the overall assessment of microfinance institutions.

Attempt was made to make the sample as inclusive and exhaustive as possible, but some research work may inadvertently have not found a place in this study.

A scientometric analysis of the MFI performance measurement is done in terms of longitudinal spread as well as geographical spread focusing the various performance dimensions of microfinance institutions.

This study aims to examine the impact of governance on the double-bottom-line performance of microfinance institutions (MFIs) in Bangladesh.

This study relies on three dimensions of corporate governance (CG) practices, that is, functions of the board of directors (BoD), top-level management activities and external governance mechanisms. This study uses panel data econometrics, particularly pooled OLS, fixed effects and two-stage system generalized method of moments to deal with potential endogeneity concerns. The panel data set covers 1,200 MFI year observations from Bangladesh for the period between 2005 and 2019.

The findings show that the presence of stakeholders on boards plays a critical role in MFIs. The dual goals of MFIs are influenced by board size, board independence and CEO duality. Internal management activities, risk perceptions and external governance also impact MFIs’ performance. Women on board have an inverse association with outreach. The activities of female managers have a significant impact on depth of outreach.

Like many others, this study also admits the data constraint issues in microfinance research. CG data for MFI are mostly unavailable in the public domain; therefore, this study must rely on third-party data sources. This study only includes MFIs that has data for all variables of interest.

Governance attributes in hybrid organizations are constituted differently. To warrant multistakeholder engagement, there is a need to develop a distinctive governance manual for hybrid organizations like MFIs.

This study proposes adopting a Social Director on the BoD to ensure the scope of outreach depth, given the importance of social goals in MFIs.

This study contributes to the ongoing debate on microfinance governance, addresses the issue based on different theoretical aspects using a country-specific data set and uses dynamic panel models to deal with potential endogeneity concerns.

This paper aims to determine the influence of governance mechanisms on sustainability and outreach of microfinance institutions (MFIs). Corporate governance has been identified as a key bottleneck in strengthening MFIs’ sustainability (financial performance) and increasing their outreach (social impact).

First, a literature study to give insight in the microfinance sector is provided. Subsequently, the data research has been performed based on the statistics of one of the funds of a Dutch independent investment manager, which is focused on responsible investments in developing countries. Hierarchical multiple regression analyses were conducted to examine the association between governance mechanisms and the respective dependent variables.

The results show that boards of a MFI with insiders (for example, employees) are a significant predictor of sustainability. Regulation impacts sustainability significantly in a negative way. Overall, the study shows that only a limited number of variables influence the sustainability and outreach of an MFI.

The limitation of the studied investment fund is that it invests in expanding and mature MFI’s. So the results of this research can only be generalized to expanding and mature MFI’s.

The governance mechanisms that are recommended in the industry guidelines and which are studied here are often not relevant in respect to sustainability and outreach of MFIs. The approach to microfinance governance should be broadened by focusing more on stakeholders and the decision making process in an MFI.

Good governance is key for the microfinance institutions and even more complicated than for regular companies that do not have a double bottom line (sustainability and outreach). to be successful in the future, and for clients to reach the best end result, it is essential that the governance mechanisms that influence the bottom line are determined.

Not much research has been done with respect to the governance mechanisms, which have impact on the sustainability and outreach of MFIs.