Financial Self-Sufficiency in Microfinance Institutions: A Complexity Theory Lens Using Fuzzy-Set Qualitative Comparative Analysis

Rikza Sarosh; Safdar Husain Tahir; Muhammad Afzal; Waleed Khalid; Aftab Hussain Tabasam

doi:10.63544/jbii.v5i6.87

Authors

Rikza Sarosh PhD Scholar of Lyallpur Business School, Government College University, Faisalabad-38000, Pakistan
Safdar Husain Tahir Associate Professor of Lyallpur Business School, Government College University, Faisalabad-38000, Pakistan
Muhammad Afzal Deputy Director of QEC, Khwaja Fareed University of Engineering and Information Technology, Pakistan
Waleed Khalid Associate Professor of Institute of Business Administration, Khwaja Fareed University of Engineering and Information Technology, Pakistan
Aftab Hussain Tabasam Associate Professor of Business Administration, University of Poonch, Rawalakot, Pakistan

DOI:

https://doi.org/10.63544/jbii.v5i6.87

Keywords:

Financial Self-sufficiency, Microfinance Institutions, FsQCA, Complexity Theory

Abstract

Financial self-sufficiency is a complex phenomenon arising from the interplay of multiple factors rather than any single factor, in the context of complexity theory. The fuzzy-set Qualitative Comparative Analysis, an asymmetric technique, is specifically designed to analyse the interplay of multiple factors simultaneously through a configurational approach. The study's input conditions are the depth of outreach, portfolio at risk, management inefficiency, active borrowers, capital structure at the institutional level, and human development at the country level. At the same time, the outcome is the financial self-sufficiency of microfinance institutions of 102 countries around the globe. The study retrieved publicly available samples from the World Bank's Mix Market database of 1295 microfinance institutions, comprising 14245 observations, covering the period 2009-2019. For comparative analysis, using the software for Fuzzy-set Qualitative Comparative Analysis, the study examines the joint interplay of input conditions and outcomes for the years 2009, 2014, and 2019. The 2019 configurations show a balanced interaction between institutional capabilities and favourable human and economic development conditions, while development conditions and operational efficiency mainly influence the 2009 configurations. The 2014 configurations place more emphasis on outreach and portfolio quality. The longitudinal comparison also shows growing configurational complexity, with active borrowers and management effectiveness remaining significant across all years, while portfolio quality gradually gains prominence over time. The study offers useful implications for MFI managers and policymakers by emphasizing the necessity of context-specific strategies that strengthen portfolio quality, managerial efficiency, borrower outreach, capital structure, and supportive development environments to ensure long-term financial sustainability.

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