International Journal of Business and Economics Volume 23, No. 1 June, 2024

Impact of Culture on the Financial Sustainability and Outreach of Microfinance Firm

Nishi Malhotra

Indian Institute of Management, Sambalpur

Abstract

The study is regarding the impact of the culture on financial sustainability and the social objective of outreach to microfinance companies. The study establishes through the GMM-based dynamic panel that the power distance and the long-term orientation ha a negative impact upon the financial sustainability and outreach of microfinance companies. Moreover, the culture significantly impacts the financial inclusion of the poor. Besides, the microfinance regulation passed in 2022 leads to volatility and abnormal returns. COVID-19 also led to the abnormal returns in the stock returns of the microfinance companies. For the significance testing of the hypothesis about the abnormal returns on passing of the Microfinance Regulations Act, 2022, the CAR (Cumulative Abnormal Returns) and BHAR (Buy and Hold Abnormal Returns) have been used. Finally, the study establishes the presence of volatility and its persistence in the stock market returns during COVID-19 through the ARCH and GARCH processes.

Keywords：microfinance, financial sustainability, financial inclusion, cultural factors

JEL Classifications：JEL 21

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