Financial Sustainability of Micro-Finance Institutions in Sub-Saharan Africa

Overview

1. Introduction

2. Theoretical Perspective

3. Approach

4. Findings

5. Implications

6. Limitations and Further Research

7. References

Research Question:

What factors influence the financial sustainability of microfinance institutions in Sub-Saharan Africa?

Microfinance offers small scale loans to those who would otherwise not have access to financial resources as a means for poverty alleviation

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A believed tradeoff between financial sustainability and outreach splits the industry into two main schools of thought

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The research utilized data from the Microfinance Information Exchange in order to conduct OLS regression analysis

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Operationally self-sufficient MFIs have a larger outreach than those which are not OSS, challenging the existence of a trade-off between outreach and financial sustainability

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Correlation analysis reveals that there is no multilinearity between variables

- According to the literature research, indicators that should influence OSS include return on assets, return on equity, number of active borrowers, financial revenue, profit margin, profit (loss), operating expense, average loan balance per borrower, cost per borrower and assets

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Results from OLS regression analysis show statistically significant results

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