Are Regulatory Micro Finance Institutions Better Off Than Non-Regulatory Ones? A Comparison of Performance and Sustainability

In this paper an empirical study has been made to compare the social (outreach related) and financial (cost, profit and sustainability related) performances of regulated microfinance institutions (MFIs) with non-regulated MFIs and to identify the causal variables of such performances. With the help of a panel data set of last five years i.e. from 2008-09 to 2012-13 it is found that the preference of Indian MFIs for regulatory structure has not been culminated with better performance. Through the causal study, which is performed through fixed effect regression model no impact of regulation is visible. Among the important explaining variables capital structure, size of operating expenditure and quality of assets are found to be prominently responsible for outreach and sustainability of Indian MFIs