Multi-criteria approach to sustainability evaluation of Indian MFIs – a well-being perspective Online publication date: Fri, 14-Apr-2023
by Ethi Jain; Pankaj Kumar Gupta
International Journal of Public Sector Performance Management (IJPSPM), Vol. 11, No. 3, 2023
Abstract: Microfinance institutions (MFIs) play an important role in poverty reduction and well-being of masses in developing countries like India. There is a tremendous increase in the size and operations of MFIs which has raised the issue of their sustainability. We have developed an approach to examine the sustainability of 50 Indian MFIs using an integration of: 1) technique for order of preference by similarity to ideal solution (TOPSIS); 2) data envelopment analysis (DEA). The results of regressions on the selected sustainability parameters performed on microfinance information exchange (MIX) database shows that sustainability scores range from low to moderate and the determinants that significantly impact the sustainability of MFIs are number of active borrowers (NAB). However, assets, portfolio at risk, operating profits are insignificant. We establish that the integrated approach is effective in combining the efficiency and ranking criterion in evaluating the sustainability of Indian MFIs.
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