An analysis of the relationship between financial performance of Microfinance Institutions and the Sustainable Development Goals

• Main Authors: Villacruz, Samuel, Torio, Dallin, Go, Jing-Jing, Tan, Carolyn
• Format: text
• Language: English
• Published: Animo Repository 2021
• Online Access: https://animorepository.dlsu.edu.ph/etdb_finman/2; https://animorepository.dlsu.edu.ph/context/etdb_finman/article/1005/viewcontent/An_Analysis_of_the_Relationship_between_Financial_Performance_of_Microfinance_Institutions_and_the_Sustainable_Development_Goals.pdf
• Institution: De La Salle University

A microfinance institution is a financial institution that offers various financial services to people who do not have access to banking. According to the Microfinance Council of the Philippines, Inc. (2010), microfinance sectors in the Philippines are developing when the government started to visualize a sustainable and working financial sector for the less fortunate people. With the establishment of the Sustainable Development Goals in 2015, microfinance is considered to be an enabler to achieving these goals (UNDP, 2019). Sustainable Development Goals (SDG) is a plan designed to make a better and sustainable future for everyone around the world, they try to solve the global challenges or problems around the world. The research paper aims to determine the performance of microfinance institutions and banks from 2011 to 2019 in the Philippines and see if it has an impact on the Sustainable Development Goals. A correlation and regression analysis were used by the researchers to analyze the data. The results of the analysis shows that the Operational Efficiency, Capital Adequacy, Liquidity Risk, Credit Risk, and Firm Size has an impact on the Return of Asset (ROA) on the microfinance institutions. On the other hand, the Financial Soundness Indicator 1 has an impact on the Tier 1 Capital to Assets, while the Financial Soundness Indicator 3 does not have an impact on the Liquid Assets to Short-term Liabilities.