The Impact Social Performance Has On The Sustainability Of Microfinance Institutions

Abstract

A microfinance institution’s social performance means its effectiveness to achieve the social goals and to create value for the clients. Some of the social goals of the microfinance institutions are providing financial and non-financial services to poor and excluded people, improve the quality of services, enhancing the income of the clients, empowering clients, reducing vulnerability, alleviating poverty, and improving the microfinance institutions’ impact on the community and environment. . Sustainability of microfinance institutions means long-term continuity of the microfinance programme, which involves the continuation of financial and nonfinancial services of microfinance institutions. Sustainability of microfinance institutions are measured using the financial ratios on portfolio, efficiency, financial management, and profitability. In the present study, sustainability is considered as a long-term continuation of the microfinance programme mutually benefiting all the stakeholders of the microfinance sector and society in general.  This study will help to establish the social performance of microfinance institution’s relationship with financial performance and if implementing social performance helps in protecting the interest of marginalized and improve the financial performance of NBFC-MFIs. The Study involves analyzing the social performance and sustainability of non-banking financial company microfinance institutions. was quantified by using social performance indicators of CERISE and compared with the financial performance by using statistical tools like t-test, regression analysis, and correlation coefficients. Under criteria-wise regression there was no statistical evidence to say that any of the six dimensions namely targeting the poor, adoption of services, benefits to clients, social responsibility, Outcome and future planning are the influencing or determinant factors on financial performance of microfinance institutions.