FINANCIAL PERFORMANCE AND OUTREACH OF MICROFINANCE

Loan, Phạm Ngọc Tường and Nguyễn, Tấn Huy (2015) FINANCIAL PERFORMANCE AND OUTREACH OF MICROFINANCE. AJPS, 1 (1). pp. 52-60. ISSN 2477-0531

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Abstract

Microfinance is generally considered as a power tool for poverty alleviation. However, the development of microfinance leads to a concern about self-sufficiency of microfinance institutions (MFIs). MFIs are expected not only to serve the poor but also to become profitable; and therefore adapting more commercial practices. From the point of view, the commercialization trend of microfinance has raised a debate that whether the focuses on financial objectives go against the original goal of reducing poverty. Using cross-sectional data of Indian MFIs in 2010 collected from the MIX, this dissertation aims to explain determinants of MFIs’ performance in terms of financial objectives and outreach to the poor. The paper also tries to address the trade-off between financial success outcomes and poverty reduction purposes. The study reveals that no evidences of this trade-off are found, indicating that it is possible to maintain greater outreach to the poor in a financially viable way.

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