IMPACT OF GOVERNANCE, SOCIAL, ECONOMIC, AND ENVIRONMENTAL FACTORS ON GREEN MICROFINANCE SUSTAINABILITY”. A CASE OF CUSTOMERS FROM RURAL AREAS OF KHUSHHALI BANK IN SINDH, PAKISTAN

Abstract

This study explores the sustainability of Khushhali Bank’s microfinance initiatives in Sindh, Pakistan, emphasizing the role of local wisdom in governance and its impact on environmental, economic, and social dimensions. Governance mediates the relationship between these factors and microfinance sustainability, aligning with García-Perez et al.'s (2017, 2018) framework. The research highlights green practices as essential for sustainable microfinance, with governance fostering their adoption. Empirical findings indicate that environmental and economic factors significantly influence governance and sustainability, while social factors show limited direct impact. Governance also emerges as a critical mediator, linking Khushhali Bank's performance to a balanced social and economic approach. The study underscores the potential of local wisdom-driven models in fostering sustainability and suggests that effective governance transforms small MFIs into larger, green-focused entities. The findings advocate for adopting green loans and environmentally friendly practices while enhancing governance to achieve long-term sustainability. Future research should validate these results using structured methodologies and extend the model to other rural contexts. This study contributes to microfinance literature by integrating governance with local wisdom and green practices, offering a comprehensive framework for sustainable rural microfinance development.