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Capital Structure and Sustainability: An Empirical Study of Microfinance Institutions

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  • Vicki L. Bogan

    (Charles H. Dyson School of Applied Economics and Management, Cornell University)

Abstract

The capital structure of lending institutions has become an increasingly prominent issue in the world of finance. Contemporaneously, microfinance institutions (MFIs) have risen to the forefront as invaluable lending institutions in the development process. Since capital constraints have hindered the expansion of microfinance programs and microfinance organizations have had various degrees of sustainability, the question of how best to finance these organizations is a key issue. This paper explores how changes in capital structure could improve MFI efficiency and financial sustainability. I find causal evidence supporting the assertion that increased use of grants by large MFIs decreases operational self-sufficiency. © 2012 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Vicki L. Bogan, 2012. "Capital Structure and Sustainability: An Empirical Study of Microfinance Institutions," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1045-1058, November.
  • Handle: RePEc:tpr:restat:v:94:y:2012:i:4:p:1045-1058
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    Cited by:

    1. Hudon, Marek & Périlleux, Anaïs, 2014. "Surplus distribution and characteristics of social enterprises: Evidence from microfinance," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(2), pages 147-157.

    More about this item

    Keywords

    lending institutions; microfinance institutions; capital structure; financial sustainability;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F3 - International Economics - - International Finance

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