Application of institutional theory variables in microfinance institutions studies: a systematic literature review

Abstract

The study employed a systematic literature review to assess the application of institution theory variables in microfinance institution studies. Using the keywords "institutional theory" and "microfinance institutions," 39 articles were extracted from Google Scholar, Emerald Insights, Taylor & Francis Online, and Sage databases. The paper used a manual search technique and content analysis to ensure relevant studies were identified. The study reveals that most microfinance scholars agree that institutional theory is essential for promoting microfinance institution variables, but few disagree. The findings indicate that scholars researched some variables more than others because of their importance to microfinance institutions. The analysis demonstrates that several microfinance scholars have linked institution theory and loan repayment because it is a major problem threatening microfinance institution operations. The findings indicate that few studies have applied institutional theory to assess microfinance institution performance. The results further reveal that microfinance service variables such as savings and deposits, microinsurance and remittances are rarely researched. Furthermore, the findings indicate that institutional theory partially covers sustainability, interest rate, efficiency, profitability, outreach, and credit risk management. Applying institutional theory to diverse MFI variables will enable exhaustive policy recommendations and overcome microfinance institutions' challenges.