Efficiency and Sustainability of Microfinance Institutions: A Comprehensive Review of Literature

Abstract

Microfinance is the provision of thrift, credit and other financial services and products of very small amounts to the poor. Although the word finance is in the term microfinance, and the core elements of microfinance are those of the finance discipline, microfinance has yet to break into the mainstream or entrepreneurial finance literature. It has become one of the most discussed subjects in the last two decades all over the world. Today micro finance programs and institutions have become gradually more important components of strategies to reduce poverty or promote micro and small enterprise development. This, in turn, gives rise to the importance of the issue of efficiency as well as sustainability of Microfinance Institutions (MFIs) especially in developing countries like India. The purpose of this paper is to provide a comprehensive review of literature addressing the issues of MFI’s sustainability and efficiency levels.