Interest Rates, Target Markets and Sustainability in Microfinance

Jacinta Nwachukwu

Research output: Contribution to journalArticle

5 Citations (Scopus)


This paper presents evidence on the reliability of claims in the literature on microfinance institutions (MFIs) regarding the role of interest rates and institutional design in helping MFIs to realize financial self-sufficiency. It pools data from 426 institutions in 41 developing countries from 2004 to 2008. Contrary to expectations, the results of an ordered-logistic regression strongly support an inverted U-shaped function for the relationship between interest rates and sustainability, irrespective of customer orientation. Additionally, a shift away from the poorest borrowers in the low-end market does not significantly improve the likelihood of being more profitable after controlling for other relevant covariates. MFIs may not, therefore, be forced to drift away from their original goal of serving the underprivileged in pursuit of financial viability.
Original languageEnglish
Pages (from-to)86-110
JournalOxford Development Studies
Issue number1
Publication statusPublished - 2014

Bibliographical note

This paper is not available on the repository

Fingerprint Dive into the research topics of 'Interest Rates, Target Markets and Sustainability in Microfinance'. Together they form a unique fingerprint.

Cite this