Empirical Study on the Key Influencing Factors and Development Mechanisms for the Sustainability of Microfinance Institutions Based on a Survey of Chinese Microcredit Companies

Abstract

Microfinance institutions (MFIs) play a significant role in financial-inclusion and poverty-alleviation activities. A critical challenge facing MFIs is of how they all can build their own capacity for sustainable and healthy development. By using the data from the pilot survey of 65 microcredit companies in Zhejiang, China, this paper explores the factors affecting MFIs activities by principal component analysis and analyzes the key Influencing factors and sustainable development performance with the analysis of variance and multi-regression model. The results indicate that four key factors of operational technology, external environment, financial condition, and institution size have a significant positive effect on the economic sustainability performance of MFIs, while the adjusted institution size has an insignificant positive effect on operational sustainability performance, which means that key factors of MFI sustainability have a greater impact on economic sustainability performance than operational sustainability performance.