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Microfinance emerged as an essential catalyst for socio-economic development and financial inclusion to reduce poverty. Microfinance institutions cannot meet their primary objective of poverty reduction if they are not sustainable financially. With the theoretical support of profit incentive theory, this paper aims to investigate the impact of organizational structure (OS), growth outreach (average loan per borrower [ALPB] and number of active borrowers), women empowerment (percentage of women borrowers [PWB]), liquidity, leverage and cost efficiency (cost per borrower) on the financial sustainability of microfinance providers (MFPs) in India and explore the possible moderating effect of the national governance indicators (NGIs).

A financial sustainability index has been developed by using principal components analysis, including both conventional measures (return of assets and return on equity) and efficiency measures (operational self-sufficiency and financial self-sufficiency). Due to the existence of endogeneity and heteroskedasticity, this study uses two-step system generalized method of moments estimates to examine the relationships for a period of 2006 to 2018.

The finding reveals that there is a strong significant relationship between financial sustainability and its influential factors. Organizatioanl Structure, loan size, women borrowers, Gross Domestic Products and inflation enhance the financial sustainability of India’s microfinance sector. However, a number of borrowers, liquidity, leverage and operating costs negatively affect the financial sustainability of MFPs of India. The estimates demonstrate that NGIs significantly moderate the association between financial sustainability and its influential factors. The NGIs negatively affect the positive impact of Organizatioanl Structure on financial sustainability. National governance increases the positive effect of loan size (ALPB) and reduces the negative effect of a number of borrowers and leverage on the financial sustainability of MFPs of India. However, NGIs negatively affect the positive relationship between Percentage of Women Borrowers and Financial sustainability of Microfinance Providers of India.

To the best of the authors’ knowledge, this study is the first of its kind that incorporates all of the six dimensions of the National Governance Indicators (NGIs) and uses as a moderator. Secondly, a financial sustainability index has been developed for measuring the financial sustainability of Microfinance Providers (MFPs).

The strict regulations and reporting requirements in microfinance institutions require a high level of knowledge and expertise in finance, accounting and risk management. Therefore, microfinance institutions (MFIs) must possess a high absorptive capacity to understand their customers’ needs and develop appropriate products and services to meet them. This study explains how organizational culture influences absorptive capacity in MFIs, with a particular focus on the mediating role of knowledge sharing.

Data were collected from 450 randomly selected employees of microfinance banking institutions in Pakistan. The data were tested for reliability and validity, and hypotheses were tested through structural equation modeling in WarpPLS 8.0.

The findings show that knowledge! sharing mediates the relationship between organizational culture and absorptive capacity. Thus, MFIs should promote knowledge sharing as a cultural value to improve their ability to acquire and utilize new knowledge, enhance absorptive capacity to drive innovation and facilitate the development of new products and services.

MFIs with higher absorptive capacity are more likely to be able to respond to changes in the market, such as new technologies or shifting customer demands. Therefore, managers should promote a culture of sharing knowledge and expertise to ensure adaptability in dynamic market conditions.

This research provides a framework for organizations to better understand the role of knowledge sharing in their success and how to leverage it to enhance their absorptive capacity. It is valuable for academics and practitioners seeking to improve organizational performance and competitiveness.

The purpose of this study was to investigate whether the percentage of female borrowers moderate the effect of female leadership on financial sustainability of microfinance institutions (MFIs).

The study collected an unbalanced panel data of 821 MFIs between 2007 and 2018 from the Microfinance Information Exchange (MIX). MFIs’ financial sustainability was measured as operational self-sufficiency (OSS). The data were analyzed using the fixed effect regression model.

The study found that having women participation in managerial and board positions has a positive effect on OSS. The results further demonstrated that the proportion of female loan officers and female borrowers had a negative effect on OSS. In addition, the study’s findings revealed that the percentage of female borrowers moderated the relationship between female board members, female managers, female loan officers and OSS.

These findings may offer important insights to policymakers and practitioners in formulating strategies to improve financial inclusion for women by examining the inherent link between female borrowers and women’s participation in leadership roles within MFIs, which affects the financial sustainability of these entities.

This study is among the few that have examined the interaction between the proportion of female borrowers and other forms of female participation, including loan officers, managers and board members, and its effect on the financial sustainability of MFIs.