Analysis of Performance Indicators on Sustenance of Micro Finance Institutes: A Comparative Study of East Asian & Pacific, and South Asian Countries

Abstract

Micro Finance services have existed for the past three decades in the developing nations. It has been implemented as the complementary to the formal financial infrastructure. The major objective is to provide the financial services to the poverty section that has been denied by the commercial banks. Voluntary and NGOs plays a vital role in the implementation of the Micro finance services in developing nations. The usage of performance measurements in the voluntary and NGOs is low as supported by literature. The literature also highlights the significance of the performance indicators, for better performance of an organisation. Financial self sustenance (FSS) and Operational self sustenance (OSS) reflects the financial performance of Microfinance Institute. The present study attempts to identify the various variables and capture the significance of the influence upon the FSS and OSS of an organisation in the context of East Asia and pacific region and South Asia (regions defined by MIX Market).

The increase in the outreach of in Microfinance institutes (MFIs) decreases the depth (average loan/ borrower), which is in sync with the literature. However the prior said phenomena's sensitivity is found to be lower in MFIs in the south Asian countries than the MFIs in the East Asian and pacific countries. The FSS in both the contexts has less of difference but has significant difference in terms of OSS. However, the variables those contribute to FSS and OSS value are also different with respect to the region. The results obtained in this paper identify and highlight the importance of the region specific variables that are to be improved in order to increase the sustenance of MFIs.