• Abul Bashar Bhuiyan Faculty of Business and Accountancy, Universiti Selangor, 40000 Malaysia
  • Jamaliah Said Accounting Research Institute, Universiti Teknologi MARA, 40450 Malaysia
  • Aza Azlina Md Kassim Graduate School of Management, Management & Science University, 40100 Malaysia
  • Abu Naaim Munir Faculty of Business and Accountancy, Universiti Selangor, 40000 Malaysia
  • Md Jafor Ali Faculty of Business Administration, Islamic University, 7003 Bangladesh


Background and Purpose: Microfinance is the most effective and widely acknowledged method of poverty alleviation across the globe but these days every so and often the MFIs are digressing from their primary mission in pretext of financial and operational sustainability of the organizations. The purpose of this research is to confirm the adherence of double bottom line sustainability of Microfinance institutions (MFIs) and further to identify the determinants of MFIs sustainability in the Philippines.


Methodology: The sample for the study was obtained from MIX- market for the period 1999-2018. Principal component analysis and KU model are used to measure the sustainability scores of MFIs. Later, a panel regression model is applied to identify the determinants of sustainability.


Findings: MFIs are not adhering to the double bottom line sustainability as majority of MFIs were unsustainable at different benchmarks set for the study. The sustainability can be achieved if MFIs start utilizing their assets, focus on improving their efficiency and portfolio quality. MFIs size also significantly influences the sustainability of MFIs.


Contributions: This study highlights the need for policy makers and regulators to develop a regulatory framework to reduce the operating cost and improve the portfolio quality of MFIs in the Philippines. They should also provide guidelines that would help MFIs in improving their asset utilization ratio as it would help them adhere to double bottom line sustainability.


Keywords: Sustainability, microfinance, double bottom line, outreach, financial sustainability.


Cite as: Bhuiyan, A. B., Saad, J., Md Kassim, A. A., Munir, A. N., & Ali, M. J. (2023). Sustainability of microfinance institutions in the Philippines.  Journal of Nusantara Studies, 8(TI), 43-61.


ADB. (2000). Finance for the poor: Microfinance development strategy. Asian Development Bank.

Ahmad, S., Lensink, R., & Mueller, A. (2020). The double bottom line of microfinance: A global comparison between conventional and Islamic microfinance. World Development, 136(1), 105130.

Alinsunurin, M. K. (2014). Efficiency of microfinance institutions in the Philippines. Enterprise Development and Microfinance, 25(4), 311-324.

Asteriou, D., & Price, S. (2001). Political instability and economic growth: UK time series evidence. Scottish Journal of Political Economy, 48(4), 383-399.

Ayayi, A. G., & Sene, M. (2010). What drives microfinance institution's financial sustainability. The Journal of Developing Areas, 44(1), 303-324.

Barres, I. (2006). Financial Self-Sufficiency (FSS). The MicroBanking Bulletin, 13(1), 21-22.

Beisland, L. A., D’Espallier, B., & Mersland, R. (2019). The commercialization of the microfinance industry: Is there a ‘personal mission drift’ among credit officers? Journal of Business Ethics, 158(1), 119-134.

Bhanot, D., Bapat, V., & Connelly, J. (2015). Sustainability index of micro finance institutions (MFIs) and contributory factors. International Journal of Social Economics, 42(4), 387-403.

Bhuiyan, A. B., Ali, M. J., Kassim, A. A. M., Alias, Z., & Munir, A. N. (2020). Mission drift and sustainability of the microfinance institutions: A methodological review. International Journal of Academic Research in Business and Social Sciences, 10(12),

Bilbao-Terol, A., Arenas-Parra, M., Cañal-Fernández, V., & Antomil-Ibias, J. (2014). Using TOPSIS for assessing the sustainability of government bond funds. Omega, 49(1), 1-17.

Bogan, V. (2012). Capital structure and sustainability: An empirical study of microfinance institutions. Review of Economics and Statistics, 94(4), 1045-1058.

Brau, J. C., & Woller, G. M. (2004). Microfinance: A comprehensive review of the existing literature. The Journal of Entrepreneurial Finance, 9(1), 1-28.

Bruhn-Leon, B., Eriksson, P.-E., & Kraemer-Eis, H. (2012). Progress for microfinance in Europe. European Investment Fund.

Bruton, G. D., Khavul, S., & Chavez, H. (2011). Microlending in emerging economies: Building a new line of inquiry from the ground up. Journal of International Business Studies, 42(5), 718-739.

Brynjolfsson, E., & McAfee, A. (2014). The second machine age: Work, progress, and prosperity in a time of brilliant technologies. WW Norton & Company.

CGAP. (2003). Microfinance consensus guidelines. CGAP.

Cull, R., Demirgu ç‐Kunt, A., & Morduch, J. (2007). Financial performance and outreach: A global analysis of leading microbanks. The Economic Journal, 117(517), F107-F133.

Dhan, S. (2003). Technical tool series 1: Tracking performance standards of microfinance institutions: An operational manual. Sa Dhan.

Dissanayake, D. (2012). The determinants of operational self-sufficiency: An empirical analysis of Sri Lankan microfinance institutions. Kelaniya Journal of Management, 1(1), 50-67.

Duwal, B. R. (2012). Comparative analysis of financial sustainability of Nepalese microfinance institutions. Economic Journal of Nepal.

Félix, E. G. S., & Belo, T. F. (2019). The impact of microcredit on poverty reduction in eleven developing countries in south-east Asia. Journal of Multinational Financial Management, 52(1), 100590.

Gisselquist, R. M., & Rotberg, R. (2009). Strengthening African governance – Index of African governance: Results and rankings 2009. Kennedy School of Government, Harvard University, and World Peace Foundation.

Gujarati, D. (2003). Basic econometrics. International Edition.

Habaradas, R., & Umali, M. (2013). The microfinance industry in the Philippines: Striving for financial inclusion in the midst of growth. SSRN.

Hartarska, V., & Mersland, R. (2012). Which governance mechanisms promote efficiency in reaching poor clients? Evidence from rated microfinance institutions. European Financial Management, 18(2), 218-239.

Hermes, N., Lensink, R., & Meesters, A. (2011). Outreach and efficiency of microfinance institutions. World Development, 39(6), 938-948.

Hulme, D., & Mosley, P. (1996). Finance against poverty (vol. 2). Psychology Press.

Ibrahim, M. (2013). Ibrahim index of African governance. Ibrahim Foundation. http://www.

Iezza, P. (2010). Financial sustainability of microfinance institutions (MFIs): An empirical analysis. (Unpublished master dissertation). Copenhagen Business School.

Islam, Z., Porporato, M., & Waweru, N. (2013). Cost structure and financial sustainability of microfinance institutions: The potential effects of interest rate cap in Bangladesh. SSRN.

Kondo, T., Orbeta Jr, A., Dingcong, C., & Infantado, C. (2008). Impact of microfinance on rural households in the Philippines. IDS Bulletin, 39(1), 51-70.

Kyereboah-Coleman, A. (2007). The impact of capital structure on the performance of microfinance institutions. The Journal of Risk Finance, 8(1), 56-71.

Mahapatra, M. S., & Dutta, S. (2016). Determinants of sustainability of microfinance sector in India. Journal of Rural Development, 35(3), 507-522.

Marakkath, N. (2013). Sustainability of Indian microfinance institutions: A mixed methods approach. Springer.

Morduch, J. (2000). The microfinance schism. World Development, 28(4), 617-629.

Nyamsogoro, G. D. (2010). Financial sustainability of rural microfinance institutions (MFIs) in Tanzania. (Unpublished doctoral dissertation). University of Greenwich.

Okuda, H., & Aiba, D. (2020). Are the Operations of Microfinance Institutions Different Across Countries: A Comparative Analysis of Cambodia and the Philippines Using DEA and PCA. JICA Ogata Research Institute.

Rahman, M. A., & Mazlan, A. R. (2014). Determinants of financial sustainability of microfinance institutions in Bangladesh. International Journal of Economics and Finance, 6(9), 107-116.

Roy, P., & Pati, A. P. (2019). Double bottom line commitments of microfinance: Evidence from Indian institutions. International Journal of Social Economics, 46(1), 116-131.

Saad, M., Bhuiyan, A. B., & Taib, H. M. (2020). The double bottom line commitment and microfinance institutions sustainability in Pakistan. In M. Saraç & M. K. Hassan (Eds.), Islamic perspective for sustainable financial system (pp. 203-234). Istanbul
University Press.

Saad, M., Hasniza, M. T., & Abul Bashar, B. (2018). Remodeling Index for the Microfinance Institutional Sustainability: A Theoretical Review. International Journal of Business and Tehnopreneurship, 8(2), 137‐148.

Saad, M., Taib, H. M., & Bhuiyan, A. B. (2017). Determinants of outreach performance of microfinance institutions in Pakistan. Journal of Research in Administrative Sciences, 6(2), 19-23.

Saad, M., Taib, H. M., & Bhuiyan, A. B. (2019). Re-evaluating sustainability of Microfinance institutions by using TOPSIS. Humanities & Social Sciences Reviews, 7(2), 581-589.

Segun, O. T. (2017). Microfinance mission drift in Nigeria. West African Journal of Monetary and Economic Integration, 17(1), 86-98.

Seibel, H. D., Llanto, G. M., Garcia, E., & Callanta, R. (1998). Microfinance in the Philippines: An assessment of microfinance institutions banking with the poor. (Unpublished Economics and Sociology Occasional Paper No. 2367). The Ohio State

Serrano-Cinca, C., & Gutiérrez-Nieto, B. (2014). Microfinance, the long tail and mission drift. International Business Review, 23(1), 181-194.

Sison, M., Peralta, V., & Villaruz, R. (2018). Sustainability of card incorporated in the Philippines. Southeast Asian Journal of Science and Technology, 3(1), 60-63.

Tehulu, T. A. (2013). Determinants of financial sustainability of microfinance institutions in East Africa. European Journal of Business and Management, 5(17), 152-158.

Yang, C.-H., & Chen, K.-H. (2009). Are small firms less efficient? Small Business Economics, 32(4), 375-395.

Yenesew, A. (2014). Determinants of financial performance: a study on selected micro finance institutions in Ethiopia. (Unpublished master dissertation). Jimma University.

Zerai, B., & Rani, L. (2012). Is there a tradeoff between outreach and sustainability of micro finance institutions? Evidence from Indian microfinance institutions (MFIs). European Journal of Business and Management, 4(2), 90-98.
How to Cite
Bhuiyan, A. B., Said, J., Md Kassim, A. A., Munir, A. N., & Ali, M. J. (2023). SUSTAINABILITY OF MICROFINANCE INSTITUTIONS IN THE PHILIPPINES. Journal of Nusantara Studies (JONUS), 8(3), 43-61.