The Role of Financial Innovations on the Sustainability of Microfinance Institutions In Pakistan

Abstract

The ability of a microfinance organization to cover all of its operating expenditures is referred to as its financial Sustainability. Reduce expenses, offer products and services that meet customers' needs, and develop creative means of reaching the unbanked poor to charge interest rates and fees that are sufficient to pay the costs. For microfinance institutions to stay financially viable, they must have a lot of loans, interest rates that are high enough to make a fair profit, and good management. While microfinance has gone a long way since 2000, it's still in its infancy in Pakistan's official banking sector. With the establishment of eight new Microfinance Banks (MFBs) and the transformation of three major Microfinance Institutions (MFIs), two of the world's biggest MFIs have begun operations in Pakistan, showing private sector engagement and institutional variety. Improved policy and regulatory frameworks are a sign of a strong economy. We conduct a secondary and quantitative study for our research.