Predictors of microfinance sustainability: Empirical evidence from Bangladesh

Poverty reduction and sustainability are the two major issues in achieving sustainable development. Microfinance emerged as an essential catalyst for socioeconomic development financial inclusion to reduce poverty. MFIs cannot meet their primary objective of poverty if they not financially. With theoretical support Profit Incentive theory, this paper examines microfinance providers (MFPs) Bangladesh. A index (FSI) is developed by using Principal Component Analysis (PCA). This study analyzes data two-step system GMM from 2006 2018 collected MIX market World Bank. The results show that loan size, number borrowers, percentage women inflation significantly impact FSI positively. Organizational structure, liquidity, leverage, cost per borrower GDP have significant negative impacts on sector Upon further analysis, estimates demonstrated national governance indicators a relationship between organizational average balance FSI. Similarly, stronger reduces (erases) effect borrowers FS MFPs incorporated all six dimensions new measuring providers.