The Impact of Social Performance on Microfinance Sustainability in Formal Microfinance Institutions

Abstract

Microfinance has an important role to play in fostering the socioeconomic sustainable development in many countries, and social performance and sustainability are the goals of formal microfinance institutions (MFIs). This study analysed the impact of social performance on microfinance sustainability of formal MFIs. The study used the regression analysis on a set of panel data from 2016 to 2024 of all formal MFIs in Vietnam. The results showed that social performance affected operational sustainability according to different trends, the breadth of outreach had a positive relationship with operational sustainability; the depth of outreach had a negative relationship with operational sustainability. While social performance had positive relationships with financial sustainability; both the breadth and depth of outreach had positive relationships with financial sustainability. Through the findings the study offers policy implication, recommends and helps the managers and policy-makers to understand this impact for effective and sustainable management of formal MFIs.