Effect of Capital Structure on the Financial and Social Performance of Indian Microfinance Institutions

Chauhan, Swati; Verma, Ashutosh; Rai, Chandra Kumar

doi:10.1177/23197145221099677

Cited by 7 publications

(12 citation statements)

References 69 publications

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“…Several studies also provided empirical evidence that debt has positive effect on profitability [6,13,[19][20][21]. In another study, Chauhan, et al (2022) [12] have studied the relationship in the Indian context. The result was that debt financing has negative impact as expected in various studies [22][23][24].…”

Section: Source Of Fund Studiesmentioning

confidence: 99%

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The Effect of Funding Source on Profitability of BPR

Lita Aprianti,

Rokhim

2023

Advances in Economics, Business and Management Research

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Profitability plays an important role in ensuring that financial institutions can survive in the long term. This study focuses on funding sources and profitability by considering two variables that refer to profitability, namely Return on Assets and performance efficiency (BOPO) using the Balanced data panel from 34 BPR in Indonesia for the 2018-2021 period. Panel data regression analysis has been used in this research. EAR and DTL have a positive effect on ROA. Furthermore, EAR, DTL, LDR, and Size increase performance efficiency (BOPO). The findings will enable BPRs or other financial institutions to utilize resources to maximize financial performance that has an impact on profitability.

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Section: Source Of Fund Studiesmentioning

confidence: 99%

“…Source of funding of BPR can be obtained from an internal or external source. Some empirical studies show that source of funds affects the profitability [3,4,[12][13][14]. Unfortunately, there is no single, widely accepted and used relationship between source of funds and profitability.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Funding Source on Profitability of BPR

Lita Aprianti,

Rokhim

2023

Advances in Economics, Business and Management Research

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“…In the Indian context, even though MFIs are playing a very important role by serving 40 million financially excluded population (Sa-dhan, 2018) there are only handful studies which measured the efficiency of MFIs (Chauhan et al, 2020; Chauhan, 2021b; Kar & Deb, 2017; Kaur, 2016; Kumar & Sensarma, 2017; Masood & Ahmed, 2012; Pal, 2010; Singh et al, 2013; Sinha & Pandey, 2019).…”

Section: Literature Review and Objectives Of The Studymentioning

confidence: 99%

“…Further, few studies have focused on the social and financial efficiency of MFIs (Chauhan et al, 2020; Kaur, 2016; Sinha et al, 2019). Kaur (2016) analysed the efficiency of 87 Indian MFIs for the year 2012 to analyse the impact of the Andhra Pradesh crisis on the social and financial performance of MFIs.…”

Section: Literature Review and Objectives Of The Studymentioning

confidence: 99%

“…Outreach is defined as the social coverage of MFI in terms of depth and breadth of outreach. Depth of outreach is the scale to which MFI penetrates more profound to the poorest; the breadth is calculated by the number of borrowers assisted by the MFI (Chauhan et al, 2020). On the other hand, sustainability is defined as the ability of MFI to sustain its microcredit and other operations as a viable financial institution (Cull et al, 2007; Navajas et al, 2000).…”

Section: Literature Review and Objectives Of The Studymentioning

confidence: 99%

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Factors Affecting Social and Financial Efficiency of MFIs: DEA and Tobit Approach

Chauhan¹

2022

Asia-Pacific Journal of Management Research and Innovation

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This study aims to examine the factors that affect the social and financial efficiency of Indian Microfinance Institutions (MFIs). Relative efficiency of 38 non-banking financial companies (NBFC)-MFIs has been measured using the non-parametric data envelopment analysis (DEA) approach. The determinants of social and financial efficiency of MFIs have been identified using censored Tobit regression. The study findings indicate that NBFC-MFIs are financially more efficient than social. Regression analysis results reveal that age and size are important variables of financial efficiency while leverage and size are social efficiencies. This may be the first extensive study measuring the determinants of efficiency on financial and social dimensions separately for Indian NBFC-MFIs. This study contributes to the scarce literature by providing the role of efficiency in the sustainability of MFIs in the long run.

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Does intellectual capital matter to MFIs’ financial sustainability?

Githaiga

Soi

Buigut

2022

AJAR

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PurposeThis paper examines the effect of intellectual capital (IC) on the financial sustainability of microfinance institutions (MFIs). The study is motivated by the increased calls for MFIs to be self-sustainable and the growing importance of knowledge-based assets as contributors of competitive advantage and sustained performance.Design/methodology/approachWith a global sample of 444 MFIs and data for 2013–2018, which yielded 2,664 MFIs-year observations, this study examines the effect of IC on MFIs’ financial sustainability. The data are extracted from the MIX Market database. Value added intellectual capital coefficients are used as proxy measures of IC. Operational self-sufficiency is used to measure financial sustainability. Data are analyzed using three-panel data estimation models: the fixed effect, the random effect and the dynamic panel system generalized method of moments.FindingsThe results show that human capital efficiency and capital employed efficiency have a positive and significant effect on the financial sustainability of MFIs. However, structural capital efficiency has a significantly negative effect on financial sustainability. These results confirm the relative importance of both tangible and intangible assets as important positive contributors of financial sustainability of MFIs.Research limitations/implicationsThe paper focused on the association between IC and financial sustainability of MFIs. Therefore, examining nonfinancial institution may validate the contributions of this study.Practical implicationsBased on the findings, MFIs’ managers are encouraged to leverage IC, physical and financial capital to attain financial sustainability. In particular, MFIs should invest in employees training and development. Additionally, owing to the positive relationship between physical capital and financial sustainability, there is need for policy interventions to ensure MFIs access adequate funding. The study further recommends mandatory disclosure of IC among MFIs.Originality/valueThis is the first paper to investigate the relationship between IC and the financial sustainability of MFIs using panel data and a global sample of MFIs; therefore, it lays an empirical ground for future studies.

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Effect of Capital Structure on the Financial and Social Performance of Indian Microfinance Institutions

Cited by 7 publications

References 69 publications

The Effect of Funding Source on Profitability of BPR

The Effect of Funding Source on Profitability of BPR

Factors Affecting Social and Financial Efficiency of MFIs: DEA and Tobit Approach

Does intellectual capital matter to MFIs’ financial sustainability?

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