IMPACT OF MICROFINANCE INSTITUTIONS TOWARDS FINANCIAL SUSTAINABILITY: AN EMPIRICAL STUDY ON KERALA

Abstract

This paper examines the determinants of financial sustainability among microfinance institutions (MFIs) operating in Kerala, India. Drawing on established performance
indicators—profitability, operational efficiency, portfolio quality, and outreach—we estimate the associations with financial self-sufficiency (FSS) using a simulated
cross-sectional dataset of twelve MFIs that mirrors realistic sector ranges. Descriptive statistics, correlation analysis, and ordinary least squares regression are used to
illustrate how sustainability is shaped by return on assets, operational self-sufficiency (OSS), portfolio-at-risk over 30 days (PAR30), unit operating costs, and staff
productivity. The results indicate that profitability and OSS are positively associated with sustainability, while higher delinquency and cost per borrower reduce it.
Outreach variables (breadth and depth) exert mixed effects but remain central to mission fulfilment. We discuss policy and managerial implications for balancing the
dual goals of financial viability and social impact within Kerala’s distinctive institutional context marked by strong SHG networks and cooperative finance. Although
the dataset is simulated for illustrative purposes, the analytical template and reporting standards are designed to be directly portable to audited secondary data or primary
field datasets. The study contributes a state-focused synthesis of sustainability drivers and offers a transparent, replicable approach for future empirical work.