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Modelling sustainability challenges and opportunities for microfinance institutions in the Arab region

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  • Nahil Saqfalhait
  • Mohammad W. Alomari
  • Abdullah AlGhazali
  • Omar M. Alzoubi

Abstract

This study aims to develop a two-step approach for assessing the sustainability of 27 microfinance institutions (MFIs) in nine Arab countries during the years from 2010 to 2018. The first step applies the technique for order preference by similarity to ideal solution (TOPSIS) approach to develop MFIs' sustainability scores, considering the financial and social performance dimensions. The second step investigates how firms-level factors and macroeconomic performance may influence the sustainability of these institutions, utilising the dynamic panel data regression models GMM and FM-OLS. Our findings reveal that over the period the overall sustainability of MFIs increased steadily from 55% to 81%, while the average threshold of the microfinance industry was 66%. Our empirical analyses demonstrate that profitability and outreach have positively influenced MFIs' sustainability. In contrast, higher financial leverage and administrative costs and GDP growth may hurt their sustainability in the long run.

Suggested Citation

  • Nahil Saqfalhait & Mohammad W. Alomari & Abdullah AlGhazali & Omar M. Alzoubi, 2026. "Modelling sustainability challenges and opportunities for microfinance institutions in the Arab region," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 18(3), pages 272-298.
    • Handle: RePEc:ids:ijsuse:v:18:y:2026:i:3:p:272-298
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