Transformation and sustainability relationship in Indian microfinance institutions Online publication date: Thu, 04-Oct-2018
by Ambika Prasad Pati
International Journal of Services, Economics and Management (IJSEM), Vol. 8, No. 4, 2017
Abstract: In India microfinance industry during the last two decades has witnessed several metamorphoses. Transformation in legal status, maturity and capital structure are prominent among them. As evidences from other economies reveal some relationship of transformation variables with sustainability parameters of MFIs it is also expected in the case of India. In line with global literature this paper tries to explore relationship between transformation and sustainability. Regression analysis of panel data based on ten years' time frame reveals significant relationship. Regulatory changes have helped MFIs to remain sustainable but with a compromise in the size of loan which gives a sign of departure from the social obligations. Regulated and matured MFIs tend to extend higher size loans which indicate a sign of mission drift. Change in capital structure, particularly leverage change has put pressure on overall profitability and sustainability of the institutions.
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