International Journal For Multidisciplinary Research

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Volume 8 Issue 4
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An Empirical Study of Financial Leverage and Financial Sustainability of Selected NBFC-MFIs in India

Author(s) Mr. Rehman, Dr. Noorul Hasan
Country India
Abstract Financial leverage is central to NBFC-MFIs because borrowings finance portfolio growth while equity absorbs losses. Excessive debt can amplify funding costs and asset-quality shocks. This study examines four listed Indian NBFC-MFIs: CreditAccess Grameen, Fusion Finance, Satin Creditcare Network, and Spandana Sphoorty Financial. A balanced panel of 16 firm-year observations from FY2021-22 to FY2024-25 was compiled from official reports. Debt-to-equity ratio represents financial leverage, while return on assets (ROA) is used as a performance-based proxy for financial sustainability. Descriptive statistics, Pearson and Spearman correlations, and pooled ordinary least squares regression with heteroscedasticity-robust standard errors were applied. The average debt-to-equity ratio was 2.90 times and the average ROA was 1.17%, with considerable dispersion caused by losses in FY2024-25. Pearson correlation was negative but negligible (r = -.065, p = .810), while Spearman correlation was near zero (rho = .031, p = .910). The regression coefficient of leverage was also negative and statistically insignificant (beta = -0.445, p = .832; R-squared = .004). Thus, the proposed negative relationship was not statistically supported. The results indicate that leverage alone does not explain sustainability across the selected firms; credit cost, borrower over-indebtedness, collection efficiency, governance, operating efficiency, and capital buffers appear more decisive. The paper recommends prudent leverage bands, stronger early-warning systems, diversified liabilities, and sustainability assessment based on combined profitability, asset-quality, liquidity, and capital indicators.
Keywords NBFC-MFI, financial leverage, financial sustainability, debt-to-equity ratio, return on assets, microfinance, India
Published In Volume 8, Issue 4, July-August 2026
Published On 2026-08-02
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E-ISSN 2582-2160
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CrossRef DOI prefix of IJFMR is 10.36948/ijfmr

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