Schafer and Fukasawa in this paper titled "Factors determining operational self sufficiency among Microfinance institutions" investigate about the factors affecting operational self sufficiency of MFIs [4]. The empirical investigation is based on the data of 1,000 MFIs retrieved from MIX market for the year 2006 and 2008 scattered in different part of the world. Their empirical findings by multiple regression analysis revealed that number of borrowers, write off ratio were found to be important determinants of operational self sufficiency. Moreover, there was no significant difference in 2006 before the worldwide financial crisis and in 2008.Zerai and Rani examined technical efficiency of Ethiopian micro finance institution (MFIs) by utilizing data of 19 micro finance institutions taken from mix market with the help of stochastic frontier analysis [5]. The findings of the study revealed that average efficiency score of 71.72% of Ethiopian MFIs. Assets, operational sustainability, depth of outreach have significant impact on efficiency. The empirical findings confirm tradeoff between efficiency and outreach of Ethiopian MFIs.Cull, Demirgüc-Kunt and Morduch examines by using dataset of 245 microfinance Institution effect of prudential supervision on MFI profitably outreach to small scale borrowers and women [6]. Their finding suggest that profit oriented micro finance institution respond to supervision by maintaining profit rates and but at the cost outreach to women and poor client that are costly to reach. Their empirical finding shows that supervision has a negative effect on outreach, because supervision is positively related with average loan balance while it is negatively related with the percentage of women borrowers. Keywords: Financial sustainability; Microfinance institutions; Microfinance crisis Introduction and IssuesMicrofinance institutions (MFIs) have proved to be very important in growth and development of a country. MFIs enhance financial deepening in an economy thereby contributing to an economy's development by providing financial services to the extremely poor section of society. Nowadays, MFIs face challenge of sustainability and outreach. There has been increased pressure on MFIs to decrease dependence on donations, grants and subsidized funding. As providing Microfinance services is a costly business due to high transaction and information cost. At presents, large number of Microfinance programs is still depending on donors, grants and donations which mean that MFIs are not financially sustainable. In 1990s, the issue of sustainability of MFIs gave rise to important debate between financial system approach and poverty lending approach (Robinson, 2001) [1].According to the report of Deutsche bank (2007) only 1-2% of MFIs in the world are financially sustainable [2]. 8% of all MFIs are close to being profitable. 70% of all MFIs are heavily dependent on subsidy. Microfinance in India has grown at tremendous pace in recent years, achieving significant outreach amongst the poor household across t...
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