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Demystifying the Trade-Off Debate in Financial Sustainability and Social Outreach and Ranking of Indian MFIs: A Bootstrap DEA Framework

Author

Listed:
  • Asif Khan

    (Institute of Management Technology (IMT) Nagpur)

  • Mustafa Raza Rabbani

    (University of Khorfakkan)

  • Rashed Aljalahma

    (Royal University for Women)

  • Sabia Tabassum

    (Amity University)

  • Ahmad Al-Hiyari

    (University of Khorfakkan)

Abstract

This study aims to demystify the financial sustainability social outreach trade-off debate in the case of Microfinance Institutions (MFIs) operating in India. In particular, the authors estimate the bias-adjusted efficiency of MFIs operating from 2010 to 2019 to scrutinize the mutual exclusivity between their twin aspects. Further, the study deploys bootstrap Data Envelopment Analysis (DEA) to estimate the robust efficiency estimate of individual MFIs. Further, the study uses a multi-dimensional approach to examine the trade-off debate between sustainability and outreach. Additionally, the study also ranks the MFIs based on their dual mission. The results suggest that the Indian MFIs are better at handling the financial dimension than the social aspect of MFIs. Moreover, the article claims the absence of a trade-off between the two goals of MFIs in India. Suryoday is the top-performing MFI in terms of financial and social aspects, followed by M-power. Further, the policymakers, top management, and microfinance professionals must redesign the regulatory and operational structure to ensure the maximum social outreach of MFIs without hampering their financial sustainability.

Suggested Citation

  • Asif Khan & Mustafa Raza Rabbani & Rashed Aljalahma & Sabia Tabassum & Ahmad Al-Hiyari, 2025. "Demystifying the Trade-Off Debate in Financial Sustainability and Social Outreach and Ranking of Indian MFIs: A Bootstrap DEA Framework," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 32(4), pages 1283-1306, December.
    • Handle: RePEc:kap:apfinm:v:32:y:2025:i:4:d:10.1007_s10690-024-09488-1
    DOI: 10.1007/s10690-024-09488-1
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models

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