Cardiff Metropolitan University
Lamiaa El.Azzazy thesis .pdf (1.73 MB)

Assessing the Trade-off between Outreach and Financial Sustainability of the Microfinance Industry in the MENA Region

Download (1.73 MB)
posted on 2024-04-12, 08:23 authored by Lamiaa El.Azzazy

In the Middle East and North Africa (MENA) region, the reduction of poverty remains one of the most critical Sustainable Development Goals yet to be achieved. The region has experienced several shocks over the last decade. This has led to high unemployment particularly among young people  and females, and this has affected both poverty levels and human well-being. Access to financial services plays a vital role in eliminating poverty in the region. One of the main tools to  improve financial inclusion in the region is Microfinance (MF). However, for microfinance intuitions (MFIs) to meet the demands of the market, they need to  focus on achieving ‘The Microfinance Dual mission’; outreach to the poor, and financial sustainability. The complementary role of social outreach and  financial sustainability is highly promising for both welfarists who strive to employ MFIs to alleviate poverty and institutionalists who advocate for attaining financial sustainability. This study assesses whether there is a trade-off between financial sustainability and outreach to the poor in MFIs in the MENA region.  

In assessing the simultaneous relationships that exist between outreach and financial sustainability, the GMM estimator was used with balanced panel data consisting of sample of 20 MFIs from 10 countries in the MENA region; a total of 300 observations over the period between 2004 and 2018. The study examines the simultaneous relationships that exist between  two endogeneity variables: Sustainability variable measured by (ROA and OSS), and outreach  variable measured by average loan balance per borrower/ GNI per capita, number of active borrowers, and proportion of women borrowers. The findings show that; a) Increases in sustainability are positively associated with greater breadth of outreach, b) increases in sustainability result in a decrease in average loan balance per borrower; implying a  better depth of outreach. The study finds no evidence of  a trade-off. The thesis advances a better understanding of the Microfinance dual mission and contributes to addressing an existing gap in knowledge by building a more comprehensive model that could guide policymakers in the microfinance sector with regard to attaining better social outreach and financial inclusion. 



  • School of Management

Qualification level

  • Doctoral

Qualification name

  • PhD

Publication year