The Moderating Effect of Depth of Outreach on the Relationship between Financial Leverage and Financial Sustainability of Microfinance Institution

Bitok S K

Published on: 2019-11-15


Microfinance institution contributes significantly to economic development and financial inclusion of the underprivileged population, however, financial sustainability remains a major challenge. Studies have revealed that financial leverage influences financial sustainability of microfinance institutions, though the findings are inconclusive. Therefore, this study seeks to investigate the moderating role of depth of outreach on the financial leverage and financial sustainability relationship. The study is grounded on agency theory, positivist paradigm and explanatory research design. Panel dataset, drawn from 30 MFIs over the period 2010 to 2018 that was extracted from the mix market database was used to test the study’s hypotheses. The data was analyzed through descriptive and inferential statistics. To control for endogeneity of the predictor variable the hypotheses were tested using the results of the Generalized Method of Moments. The findings of the study established that financial leverage had a negative significant effect on financial sustainability. Furthermore, depth of outreach had a positive significant moderating effect on the relationship between financial leverage and financial sustainability. The study concludes that depth of outreach influences the financial leverage and financial sustainability causality. The study recommends that managers of MFIs should maintain a balance between financial leverage and depth of outreach to attain financial sustainability.


Financial leverage; Financial sustainability; Microfinance institutions; Depth of outreach


Microfinance institutions (MFIs) play an important role in economic growth and financial inclusion especially in developing and emerging economies [1-2]. The core objective of MFIs is to fill the financing gap created by the mainstream banking institutions. Studies have shown that MFIs address the financing challenges facing the economically active, though poor, population that has been excluded by the conventional banking institutions [3]. The rapid expansion of MFIs is believed to have a positive effect on poverty alleviation and economic development [4]. Though MFIs have succeeded in the expansion of the financial sector, a large population in the undeveloped nations remains financially excluded [5]. Financial exclusion acts as a brake to economic development hindering human and capital accumulation which might translate to financial sustainability [6-7]. Despite the impressive growth of the microfinance sector, these institutions continue to grapple with financial sustainability because they are largely dependent on aids to extend their depth of outreach programs. Additionally, these firms suffer from high operating costs and capital constraints in addressing their demands since government initiatives have not been successful in advocating for MFIs financial sustainability [8-9]. Financial unsustainability of MFIs has adversely affected the realization of the desired levels of outreach, considering that these firms are intended to serve the underprivileged segment of the population [10]. Moreover, studies contend that financially sustainable MFIs can efficiently serve the low-income population, and they grow bigger over time [11]. In the recent past, MFIs financial sustainability has captured the attention of scholars and policymakers owing to its impact on firm growth and long-term survival [12-13]. Financial sustainability has been considered as a yardstick of their success in the MFI sector. According to financial sustainability is key in safeguarding the self-sustainability of MFIs, instead of the usual overreliance on subsidies and donations. Having adequate liquidity, to offer financial services to the deprived population, mitigates likely challenges of bankruptcy through the extension of facilities to the targeted clientele. Besides, financial sustainability of MFIs remains vital to the effective realization of the poverty alleviation agenda [14-15]. However, since inception, MFIs are struggling with the duo goals of serving a significant number of the underprivileged population, and their financially sustainability [16]. In developing economies, MFIs employ different types of financing structures that include, customer deposits and commercial loans [17-18]. In general terms, financing structure refers to how an organization’s assets are funded; short-term borrowings, long-term debt and owner's equity. Borrowing from the pecking order, the financing priority of microfinance institutions is deposits, debt, and equity [19]. This financing order also conforms with the agency theory, which is built on the separation of ownership from control [20]. Scholars conjectures that debt financing aligns management’s interests with those of the shareholders [21-22]. Financial leverage, a ratio of debt to equity capital, helps in reducing the moral hazards and adverse selection associated with free cash flows; that is, monitoring the misappropriation of a firm’s assets by the agent, with might affect financial sustainability [23]. Despite the significance of financial leverage on financial sustainability of MFIs, existing literature shows mixed results. There are studies claiming that financial leverage has a positive significant effect on financial sustainability [24-26]. Conversely, some scholars posit a negative relationship [27-31]. The discrepancy of these findings can be explained by contextual factors since most studies were undertaken in advanced economies (USA, Europe and Asia Pacific), with higher financial inclusion rate and more disposable household income, implying that the impact of MFIs is lower as compared to banks. However, in developing economies MFIs plays an essential role in bridging the gap created by conventional banks. Though studies have extensively explored the direct association between financial leverage and financial sustainability, little is known about the interaction of depth of outreach, financial leverage and financial sustainability. Depth of outreach entails extending financial services to a large number of people in the lower-income strata Wijesiri, Yaron & Meoli, 2017. There exists a crucial connection between depth of outreach and financial leverage. Financial leverage enables MFIs expand their depth of outreach, while an increase in depth of outreach necessitates additional financial resources, thus higher financial leverage. With an increase in depth of outreach, MFIs can either expand or reduce their financial leverage. Furthermore, by adopting modern financing and lending technologies to extend their outreach programs and financial sustainability [32-33]. Presumably, depth of outreach may influence the relationship between financial leverage and financial sustainability. Therefore, the present study aims at establishing the moderating role of the depth of outreach on the relationship between financial leverage and financial sustainability of MFIs in Kenya.

Literature Review

Theoretical literature: Agency theory

The study is grounded on the agency theory advanced by, in their seminal paper “Assessing the theory of the firm: Managerial behavior, agency costs, and ownership structure.” The theory conjecturers the presence of a conflict between the principal and the agent; where the managers (agents) engage in self-seeking behaviors at the expense of stakeholders (principal). Posit that a firm's choice of the capital structure may help lessen agency conflicts. Presumably, the theory emphasizes the need for separation of ownership from control. the theory was later reviewed by who suggested that higher financial leverage eases the conflicts between shareholders and managers. Similarly, advocated that high leverage limits managerial discretion and lessens a firm's exposure to liquidation while subjecting managers to loss of salaries, reputation, and perquisites. Moreover, piling pressure on the manager to generate sufficient cash flow for debt repayment [34-35]. Theoretically, a firm’s optimal financial structure is a mixture of debt, preferred stock, and common equity [36]. It is worth mentioning that deposits are the main source of funds to MFIs, which permits the mobilization of micro-savings from customers. A statutory requirement for MFIs to meet certain specific capital requirements before being licensed to participate in deposit collection and lending [37]. Therefore, with the low saving levels and high demand for loans, debt capital is inevitable to MFIs. However, debt has been pronounced as a double?edged sword because it can magnify either the MFIs gains or their potential losses. This implies that a firm can either extend its financial sustainability or distress through an optimal leverage. Firms that employ leverage benefit from the tax shield since interest is an allowable expense for the purpose of corporate taxation [38]. Conversely, extremely levered firms are likely to expose to financial distress lowering their value. The theoretical review in this study maintained that MFIs should consider financial leverage for two main reasons. First, finance theories have confirmed that leveraged firms align managerial interests to those of the shareholders and possibly extend the level of depth of outreach [39]. Secondly, through external debt, MFIs can access sufficient and cheaper sources of capital which will improve their financial sustainability, however, management should consider the firm's optimal debt level to avoid financial distress.

Empirical Review

Financial leverage and financial sustainability

Financial sustainability, the extent to which a firm covers the full cost from revenue generated, without reliance on government subsidies or donor funds is crucial to MFI's growth and long-term survival [40]. Though MFIs continue to experience serious challenges with their service provision, firms are accessible to innovative external financing options, with the emergence of capital markets [41]. For instance, through employing commercial source financing like financial leverage, MFIs can realize financial sustainability [42]. Though, there appears to be a consensus in favor of leverage due to its enormous role in monitoring free cash flows and the agency problem. Moreover, recent researchers have revealed that firms improve their financial sustainability through financial leverage. Debt obligations might compel a firm to increase its financial leverage or collateralize its future cash flows to prevent financial distress, which can lead to liquidation or takeover [43]. Though, the association between financial leverage and financial sustainability appears in extant literature, the findings are largely contentious. A study in the US banking sector, found a positive significant relationship between financial leverage and financial sustainability. Similarly results were reported by On the contrary, a study by that investigated a sample of 10 countries globally, found a negative association between financial leverage and financial sustainability. Similar findings were reported by who studied 114 MFIs from 62 countries and panel data for the period between 1999- 2001. The debate was further intensified by who explored using balanced panel data set of 126 observations from 14 MFIs for the period between 2002-2010, who established an insignificant effect between financial leverage and financial sustainability [44]. Given the empirical literature, it is apparent that the relationship between financial leverage on financial sustainability requires further investigation; particularly in emerging economies where MFIs play a central role in socio-economic development despite the recognizable financial and legal impediments. Given the aforesaid literature review, the study hypothesizes as follows.

H01: Financial leverage had no significant effect on the financial sustainability of Microfinance institutions in Kenya (Figure 1).

Figure 1: Conceptual Framework.


Depth of outreach, financial leverage, and financial sustainability

The relationship between financial leverage, depth of outreach and financial sustainability appears scantly in literature. Researchers contend that financial leverage is a double-sided component because it can either amplify or reduce MFIs financial sustainability [45-46] who centered on sample 43 Islamic banks worldwide between the period 1994-2001, found a positive significant relationship between financial leverage and financial sustainability. A study by who sampled 640 firms listed in the Taiwan Stock Exchange, found a negative relationship between financial leverage and financial sustainability. Though MFIs have been incorporated into the main financial systems to improve financial inclusion their financial sustainability is largely dependent on their depth of outreach. Depth of outreach entails serving the poor borrowers according to the welfarist theory. Moreover, MFIs primarily aims at offering financial services to the poor excluded population. Outreach is classified as depth or width of services provisions; such as credit provision, savings mobilization, micro insurance, money transfer, and payment services. Empirical studies reveal a trade-off amongst financial sustainability and depth of outreach [47]. In this regard, financial sustainability can be attained at the expense of their depth of outreach to the poor. Similarly, researchers have examined the association of depth of outreach and financial sustainability. Adhikary and Papachristou 2014, analyzed the financial sustainability and depth of outreach of 133 South Asian MFIs, found positively significant effect suggesting that MFIs on sustained financial expansion paths can reach their social goal at minimized risk. According to found a positive significant relationship between financial sustainability and depth of outreach, revealing that MFIs must operate efficiently to attain the desired goals [48]. A study by investigated 702 MFIs operating in 83 countries globally, found positive complementary evidence on the relationship between financial sustainability and depth of outreach. A study conducted in East African using a panel data of 47 microfinance institutions for four years provide evidence of a trade-offs between depth of outreach and financial sustainability [49]. Navajas, Schreiner, Meyer, Gonzalez-Vega & Rodriguez-Meza 2000, found a positive significant relationship on the tradeoff between depth of outreach and financial sustainability. While, the institutionalist view, conjectures a positive significant relationship between the depth of outreach and financial sustainability, the intersection is debatable, particularly, among stakeholders and policymakers examined an unbalanced panel of 1210 MFIs, found a positive significant empirical evidence on the relationship between financial sustainability and depth of outreach. Further, Schreiner 2002 investigated the aspects of depth of outreach of BancoSol MFIs between 1987-1996, found the presence of tradeoff [50]. Furthermore, Rhyne 1998 and Von Pischke 1998 found that greater transaction costs were associated with smaller loans causing a tradeoff. Besides, Olivares-Polanco 2005 conducted a study on 28 Latin American MFIs using multiple regression analysis, establish evidence of presence a tradeoff between depth of outreach and financial sustainability. The study hypothesizes a tradeoff which may improve over time due to economic dynamics which entails improvement operational modes and innovations (Manos & Yaron, 2009. Contrary to the earlier findings by the scholars, the tradeoff between depth of outreach and financial sustainability established a negative association Paxton, 2003; Hartarska & Nadolnyak, 2007. While, Gonzalez and Rosenberg 2006, examined using a database of 2600 microfinance institutions from three sources Microcredit Summit, MIX Market and Micro-Banking Bulletin, found an insignificant relationship on the tradeoff. Furthermore, a study by Kereta, 2007 for the period between 2003-2007 MFIs in Ethiopia, found an insignificant association between depth of outreach and financial sustainability [51]. Manos and Yaron 2009, identified a positive short-run bond linking depth of outreach and financial sustainability with the long-run association glued on a scale of operations and innovation in lending. Advocates for financial sustainability posit that, as MFIs grow, increased number clients, thus at the integration stage, loans granted to customers will be increased sequentially. Therefore, a trade-off between financial sustainability versus depth of outreach is one that has been hotly been debated by scholars lately in the literature Schreiner 2000; Cull, Demirgu¨ ç?Kunt & Morduch 2007; Mersland & Strom, 2010 [52-54].

H02: Depth of outreach has no significant effect on the financial sustainability of Microfinance institutions in Kenya.

The moderating role of the depth of outreach on the financial leverage and financial sustainability relationship

Though studies have extensively examined the relationship between financial leverage and financial sustainability, the moderating role of depth of outreach is unclear. Previous focused on the direct link between financial leverage and financial sustainability, as well as the relationship between the depth of outreach and financial sustainability. MFIs depth of outreach is likely to influence the relationship between financial leverage and the financial sustainability of MFIs. First, outreach programs might stimulate the demand for credit by the borrowers, which may force MFIs to strive for external capital to fill the gap between deposits and the demand for loans Esperance, Ana & Mohamed, 2003. Second, increased outreach might lead to an improved level of deposits, assuming that the level of borrowings remains constant, thus improved financial sustainability. Thus, this study hypothesizes as follows;

H03: Depth of outreach does not moderate the relationship between financial leverage and microfinance institution financial sustainability in Kenya.

Conceptual Framework

The objective of the study is to evaluate the effect of financial leverage on MFI financial sustainability and the moderating role of the depth of outreach. Hence, the outcome variable is financial sustainability, the predictor variable is financial leverage while the depth of outreach is the moderating variable. The study controls for firm age and firm size. The theoretical association between the study variables is depicted in the conceptual framework as shown below.

Research Design

The study was guided by the explanatory research design since it seeks to establish the causal linkage between financial leverage, depth of outreach, and financial sustainability. The research methodological issues are discussed in the subsections.

Data and Sample

The target population was the 52 MFIs in Kenya. However, due to the availability and completeness of data, only 30 MFIs qualified for further statistical analysis. Panel data for the period between 2010 to 2018 was extracted from the MIX market database, compiled by the World Bank, with the aid of the data collection schedule. In total, the study had 270 year-end observations.

Research Model

The study hypothesis was tested using multiple regression analysis. The generalized method of moments was used to test the hypothesizes. Three regression models were used; where model 1 tested the controls, model 2 the direct effect while modeling 3 test moderation as illustrated below.


FSSit = MFI financial sustainability for … i in year t

FLit = MFI financial leverage for … i in year t

DOit = MFI Depth of Outreach…i in year t

FSit = Firm size…. i in year t

FAit= Firm Age …i in year t

0it = Constant

β1it –β3it = Coefficients of regression

εit = Error terms

Data Analysis

Data was analyzed using descriptive and inferential statistics. The data was summarized into mean, standard deviation, minimum and maximum values of the research variables. Further, the nature and the magnitude of the relationship among variables were tabulated using pairwise correlation analysis. Additionally, several diagnostic tests were conducted before testing the hypothesis through regression analysis. The results of the diagnostic tests as shown in tables 1-3, confirms that the data was suitable for further statistical analysis.

Panel unit root tests

The study tested to establish whether the variable was stationary with the aid of Phillip-Perron’s test unit root. To establish the presence or absence of unit root. The following hypothesis was considered for this test. Null hypothesis (Ho): All panels contain a unit root. The alternative hypothesis (H1): At least one panel is stationary. Looking at the p-values in Table 1, the null hypothesis was rejected, which means that none of the variables had a unit root.

Table 1: Unit root.


Inverse chi-


Inverse logit

Modified inv. chi-









































Firm age










Firm size










Depth of















Table 2:  Breusch-Pagan / Cook-Weisberg Test for Heteroskedasticity.

Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance

Variables: fitted values of Financial Sustainability

chi2(1)      =  .50

Prob > chi2  =   .4808

Table 3: Wooldridge test.

Wooldridge test for autocorrelation in panel data

H0: no first-order autocorrelation

F(1,7) =      6.597

Prob > F =      .0671

Test for heterokedasticity

Heteroskedasticity was tested using the Breusch-Pagan test. The error term mean was constant over time if not constant it will affect the association amongst financial leverage and financial sustainability. A heteroscedasticity test was conducted to ascertain whether the error terms are correlated across observation in the time series data. The study findings revealed that Chi2 (1) was 0.50, a p-value of 0.4808 implying that the hypothesis was not rejected hence revealing that the assumption of constant variance was not violated. The results are presented in Table 2 below.

Test for autocorrelation

The study employed Wooldridge test to establish the presence of autocorrelation in the data; whether or not the residual is serially correlated and the results as shown in table 3. The test statistic as reported by the F-test with one and 7 degrees of freedom, the value of 6.597 and p-value of 0.0671 indicated the absences of autocorrelation.

Results and Discussion

Table 4 shows the means, minimum, and maximum values and the standard deviation of the research variable and data for a period between 2010-2018. Based on the table, the mean of financial sustainability was 0.351 with a minimum of -.864, a maximum of 4.91 and a standard deviation of 0.93, whereas, the average financial leverage was 1.04 with a minimum of -3.91, a maximum of 4.82. and a standard deviation of 1.33. The depth of outreach had mean of 5.84 and a standard deviation of 1.27. Furthermore, the MFI age and size had mean of 1.86 and 0.736, as the standard deviation was 0.181 and 0.46 respectively. These indicate the variability of variable changes over some time.

Correlation Analysis

The study used correlation to examine the relationship between financial sustainability, financial leverage, firm age and firm size. The correlation matrix is illustrated in table 5, where the results indicate that financial sustainability and financial leverage had positive significant correlation (r= 0.162; p<0.05). Depth of outreach and financial sustainability had a positive significant correlation (r= 0.146; p<0.05), depth of outreach and financial leverage (r= -0.143; p<0.05). Further, the correlation concerning financial sustainability and MFI age (r=.039, p<0.05), financial leverage and MFI age (r=.315, p<0.05), financial leverage and MFI size (r=.383, p<0.05), MFI size and MFI age (r=.459, p<0.05) was positive. While, financial sustainability and MFI size (-.271, p<0.05) were negatively correlated.

Regression Analysis

The study’s hypothesis was tested using the Generalized Method of Moments. The hypothesis stated that financial leverage had no significant effect on MFI's financial sustainability in Kenya. The findings reported a beta coefficient of -0.089 and a p-value= 0.000 <0.05, therefore, the null hypothesis was rejected implying that the alternative hypothesis was adopted. Thus, a unitary change in financial leverage led to a 0. 089 unit change in financial sustainability. The results of this study suggest that excessive use of debt capital might lead to financial distress thus lowering the firm's value. Confirmed that MFIs with less debt have better financial sustainability. Therefore, managers should craft policies that guide optimal financial leverage to enhance MFIs' financial sustainability. This is so, especially in developed nations where MFIs have a higher potential of growth but they suffer from low deposit levels and underdeveloped external capital markets. The second objective was to investigate the effect of depth of outreach on financial sustainability.

Table 4: Descriptive Statistics.









Financial sustainability








Financial leverage








Depth of outreach








Firm size








Firm age








Table 5: Correlation Matrix Results.







Financial Sustainability (FSS)






Financial leverage (FL)






Depth of Outreach (DO)






Firm age (FA)






Firm size (FS)






Table 6: Results of direct relationship using the Generalized Method of Moments.

Financial sustainability


Std. Err.



[95% Conf.









Firm Age (FA)







Financial Leverage (FL)







Firm Size (FS)







Depth of Outreach (DOO)














Table 7: Results of moderated effect using generalized method of moments.

Financial sustainability


Std. Err.



[95% Conf.









Firm Age (FA)







Financial Leverage (FL)







Firm Size (FS)







Depth of Outreach (DOO)





















Also, the findings revealed that the depth of outreach had positive significant effect on financial sustainability. Increased depth of outreach implies higher access to customers' deposits and enhanced access to borrowers' information, thus improved financial sustainability Moreover, scholars contend that the depth of outreach is an indicator of quality MFIs' efficiency in financial intermediation Quayes, 2012. The finding further revealed that MFI age had a significant positive effect on financial sustainability. Older MFI tends to be more financially sustainable due to accumulated savings besides amassed experience in credit management. MFI size had a positive effect on financial sustainability; implying that larger firms are more financially sustainable compared with smaller ones. Large MFIs are associated with improving financial access and better management which generates revenue and in the long-run realize the MFIs financial sustainability. The third objective was to establish whether the depth of outreach moderated the relationship between financial leverage and MFI's financial sustainability in Kenya. The results presented in table 7 Indicate that moderation was positive and significant (β = 0.240, ρ > 0.05). Thus, with increased depth of outreach financial leverage would have positive impact on MFI's financial sustainability. Equally, a higher depth of outreach stimulates the demand for loans which is disproportionate to customers’ deposits, which might force MFIs to improve their financial leverage to fill the existing deficit. To be financially sustainable, MFIs should, therefore, strike a balance between the depth of outreach and its optimal debt limit to avoid probable debt traps.


The findings of the study revealed that financial leverage had a negative significant effect on MFI financial sustainability. Based on these findings, the study concluded that financial leverage adversely affects financially sustainable MFIs. Accordingly, MFIs should consider using their internal finances to mitigating possible financial distresses associated with external borrowing. Further, the study confirms that, though finance theories advocate the usage of debt, financial leverage is a double?edged sword since it can either improve MFI financial health or sink these institutions to financial distress. The positive interaction between depth of outreach and financial leverage suggests the extent of external financings and proportion of the MFIs depth of outreach if these firms are to be financially sustainable. Debt capital attracts interests that should be offloaded from revenues generated from MFIs lending activities.

Recommendations and Suggestions for Future Research

Microfinance institutions have been feted and perceived as a panacea to poverty alleviation and financial inclusion. However, MFIs are largely financially challenged. To address this problem, the findings reveal that management should give priority to external financing to improve financial sustainability since debt improves the firm value and it a cheap source of finance. Besides, shareholders should consider debt financing since it aligns managerial goals to those of the firm, principally shareholders' wealth maximization and profit. Also, study recommends that MFIs should develop borrowing strategies to guide managers to ensure prudent borrowing that contributes to the overall profitability of their success. Finally, study recommends that future studies can consider other subsectors such as banks, Sacco’s and insurance companies, which might shed more light on association between financial leverage and financial sustainability.


  1. Lopatta K, Jaeschke R, Chen C. Stakeholder engagement and corporate social responsibility (CSR) performance: International evidence. Corporate Social Responsibility EnvironManag. 2017; 24: 199-209.
  2. Henock MS. Financial sustainability and outreach performance of saving and credit cooperatives: The case of Eastern Ethiopia. Asia Pacific Manag Rev. 2019; 24: 1-9.
  3. Marwa N, Aziakpono M. Financial sustainability of Tanzanian saving and credit cooperatives. Int J Soc Econ. 2015; 42: 870-887.
  4. Karlan D, Morduch J. Access to finance Handbook of development Econ. 2010; 5: 4703-4784.
  5. Christen RP, Rosenberg R, Jayadeva V. Financial Institutions with a Double Bottom Line: Implications for the Future of Microfinance. CGAP Occasional Paper. 2004; 8: 1-20.
  6. Beck T, Kunt DA. Access to finance: An unfinished agenda. World Bank Econ Rev. 2008; 22: 383-396.
  7. Olomi DR. African entrepreneurship and small business development: Context and process. 2009.
  8. Helms B. Access for all: building inclusive financial systems: The World Bank. 2006.
  9. Ogujiuba K, Jumare F, Stiegler N. Challenges of microfinance access in Nigeria Implications for entrepreneurship development. 2013.
  10. Akinlua B, Akintunde B. Alternative perspectives on the funding problems of small scale businesses in the development countries a case study of Nigeria. 2008.
  11. Schneider L, Greathouse G. Strategies for financial integration: Access to commercial debt. Womens World Banking Financial Products and Services Occasional Paper Womens World Banking New York. 2004.
  12. Nyamsogoro GD. Financial sustainability of rural microfinance institutions (MFIs) in Tanzania. University of Greenwich. 2010.  
  13. Pylypiv MI, Chakravarty S. The role of subsidization and organizational status on borrower repayment rates in microfinance institutions. World Development. 2015; 66: 39.
  14. Kabeer N. Direct social impacts for the Millennium Development Goals. Money with a Mission Microfinance and Poverty Reduction. Practical Action Publishing in association with GSE Research. 2005; 66: 66-93.
  15. Mahjabeen R. Microfinancing in Bangladesh Impact on households consumption and welfare. J Policy Modeling. 2008; 30: 1083-1092.
  16. Lensink R, Mersland R, Vu NTH, Zamore S. Do microfinance institutions benefit from integrating financial and nonfinancial services. Appl Econ. 2018; 50: 2386-2401.
  17. Chikalipah S. Optimal sources of financing for microfinance institutions in sub-Saharan Africa. Develop Practice. 2019; 29: 395-405.
  18. Kar AK. Does capital and financing structure have any relevance to the performance of microfinance institutions. Int Rev Appl Econ. 2012; 26: 329-348.
  19. Sapundzhieva R. Funding microfinance a focus on debt financing. Microfinance Bulletin. 2011; 1-8.
  20. Jensen MC, Meckling WH. Theory of the firm Managerial behavior agency costs and ownership structure. J Finan Econ. 1976; 3: 305-360.
  21. Jensen MC. Agency costs of free cash flow corporate finance and takeovers. Am Econ Rev. 1986; 76: 323-329.
  22. Myers SC. Determinants of corporate borrowing. J Financ Econ. 1977; 5: 147-175.
  23. Coleman KA. Corporate governance and firm performance in Africa: A dynamic panel data analysis. Studies Econ Econometrics. 2008; 32: 1-24.
  24. Berger AN, Patti DEB. Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry. J Bank Finance. 2006; 30: 1065-1102.
  25. Champion D. Finance the joy of leverage. Harvard Bus Rev. 1999; 77: 19-22.
  26. Roden DM, Lewellen WG. Corporate capital structure decisions evidence from leveraged buyouts. Finan Manag. 1995; 76-87.
  27. Abate GT, Borzaga C, Getnet K. Financial sustainability and outreach of microfinance institutions in Ethiopia Does organizational form matter. 2013; 37.
  28. Booth L, Aivazian V, Kunt DA, Maksimovic V. Capital structures in developing countries. J Finance. 2001; 56: 87-130.
  29. Deesomsak R, Paudyal K, Pescetto G. The determinants of capital structure evidence from the Asia Pacific region. J multinational financ manag. 2004; 14: 387-405.
  30. Fama EF, French KR. Testing trade-off and pecking order predictions about dividends and debt. Rev Financ Stud. 2002; 15: 1-33.
  31. Hou TCT. The relationship between corporate social responsibility and sustainable financial performance: Firm?level evidence from Taiwan. Corporate Social Responsibility and Environmental Management. 2019; 26: 19-28.
  32. Hermes N, Lensink R. Microfinance its impact outreach and sustainability. World Development. 2011; 39: 875-881.
  33. Blanco A, Mejias PR, Lara J, Rayo S. Credit scoring models for the microfinance industry using neural networks: Evidence from Peru. Expert Syst Appl. 2013; 40: 356-364.
  34. Grossman SJ, Hart OD. Corporate financial structure and managerial incentives. The economics of information and uncertainty. 1982; 107-140.
  35. Williams J. Perquisites risk and capital structure. J Finan. 1987; 42: 29-48.
  36. Harris M, Raviv A. The theory of capital structure. J Finan. 1991; 46: 297-355.
  37. Cull R, Kunt DA, Morduch J. Microfinance trade-offs: Regulation, competition and financing. The handbook of Microfinance. 2011; 141-157.
  38. Modigliani F, Miller MH. Corporate income taxes and the cost of capital: a correction. Am Econ Rev. 1963; 53: 433-443.
  39. Hudon M, Traca D. On the efficiency effects of subsidies in microfinance: An empirical inquiry. World Development. 2011; 39: 966-973.
  40. Kinde BA. Financial sustainability of microfinance institutions (MFIs) in Ethiopia. European J Bus Manag. 2012; 4: 1-11.
  41. Hartarska V, Nadolnyak D. Do regulated microfinance institutions achieve better sustainability and outreach Cross-country evidence. Appl Econ. 2007; 39: 1207-1222.
  42. Ghosh S, Van Tassel VE. Funding microfinance under asymmetric information. J Dev Econ. 2013; 101: 8-15.
  43. Towo N, Mori N, Ishengoma E. Financial Leverage and Labor Productivity in Microfinance Co-operatives in Tanzania. Cogent Business Manag. 2019; 6.
  44. Jegede C, Kehinde J, Akinlabi B. Trends of outreach and sustainability of microfinance institutions in Southwestern Nigeria. Bus Manag Rev. 2012; 3: 242.
  45. Ross S, Westerfield R, Jaffe J. Corporate structure Boston McGraw Hill/Irwin. 2002.
  46. Hassan MK, Bashir AHM. Determinants of Islamic banking profitability. Paper presented at the 10th ERF annual conference Morocco. 2003.
  47. Galema R, Lensink R. Microfinance commercialization financially and socially optimal investments. University of Groningen. 2009.
  48. Bos JW, Millone M. Practice what you preach Microfinance business models and operational efficiency. World Development. 2015; 70: 28-42.
  49. Quayes S. Depth of outreach and financial sustainability of microfinance institutions. Appl Econ. 2012; 44: 3421-3433.
  50. Quayes S. Probability of Sustainability and Social Outreach of Microfinance Institutions. Economics Bulletin. 2019; 39: 1047-1056.
  51. Baumann T. Pro-poor microcredit in South Africa: cost-efficiency and productivity of South African pro-poor microfinance institutions. Develop Southern Africa. 2004; 21: 785-798.
  52. Gopalaswamy AK, Babu M, Dash U. Systematic review of quantitative evidence on the impact of microfinance on the poor in South Asia. Protocol London: EPPI-Centre, Social Science Research Unit. Institute of Education. University College London. 2015.
  53. Kipesha EF, Zhang X. Sustainability profitability and outreach tradeoffs: evidences from microfinance institutions in East Africa. Eur J Bus Manag. 2013; 5.
  54. Schreiner M. Scoring the Next Breakthrough in Microcredit Occasional paper. 2003; 7.