FINANCIAL SUSTAINABILITY OF MICROFINANCE PROVIDERS

Sari

Microfinance sector showed a tremendous growth for the last decade and got a considerable attention throughout the entire world specifically in the developing countries, but on the other side the number of poor people has not been decreased. The focus of this study is to investigate the financial sustainability of microfinance providers and to examine the different factors or problems that affecting it. Financial sustainability is the capability of microfinance providers to main its efficiency/productivity and profitability for long term. Financial self-sufficiency, operational self-sufficiency has been proposed for the measurement. Regression analysis is proposed to find out the impact of different factors on the financial sustainability of microfinance providers. Factors affecting the financial sustainability of microfinance providers includes the presence of aggressive marketing, focus on liquidity, focus on profit oriented programs, Net interest margin, commercialization, high level of competition, entrepreneurial behaviors of the people, high interest rates, political instability, growth addiction, focus on stability or short term profitability, focus on loan repayment, lack of follow-up programs, lack of awareness, miss use of loan, fear of defaults, lack of technical support etc. which have to be considered in future studies.