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Debt, Free Cash Flow, and Financial Performance in Microfinance: A Global Analysis

Yan Zhang et al.

Accounting and Finance2026https://doi.org/10.1111/acfi.70182article
AJG 2ABDC A
Weight
0.50

What the paper says

This study investigates how debt affects free cash flow (FCF) and financial performance in microfinance institutions (MFIs). Drawing on a global sample of 484 rated MFIs across 74 countries and applying static and dynamic panel models, the analysis shows that total debt reduces FCF, with short‐term debt exerting the strongest effect. At the same time, debt enhances operational efficiency by lowering costs and increasing operating profits. However, these gains are offset by higher funding expenses, resulting in reduced overall financial performance. The findings suggest that while debt can serve as a disciplinary mechanism in MFIs, excessive reliance on it risks undermining financial sustainability.

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https://doi.org/https://doi.org/10.1111/acfi.70182

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@article{yan2026,
  title        = {{Debt, Free Cash Flow, and Financial Performance in Microfinance: A Global Analysis}},
  author       = {Yan Zhang et al.},
  journal      = {Accounting and Finance},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/acfi.70182},
}

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Debt, Free Cash Flow, and Financial Performance in Microfinance: A Global Analysis

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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