The purpose of this paper is to investigate the determinants of the Operational Self-Sustainability (OSS) of Vietnamese microfinance institutions (MFIs). This research uses both qualitative and quantitative research methods: (i) qualitative research was via in-depth interviews with ten microfinance practitioners, policymakers and researchers; (ii) quantitative research was conducted by using panel data of 34 MFIs in the period 2011-2015 with binary logistics and OLS regressions. Results are as follows: (i) MFIs’ OSS in Vietnam are mainly determined by five key factors: portfolio at risk (PAR>30), capital structure, gross loan portfolio, scope of activities and legal form; (ii) OSS are most affected by legal status (social organizations have better OSS than formal MFIs or programs/projects), location (MFIs focus in one province have higher OSS than working nationwide or just in one district), capital structure (MFIs with more equity proportion have higher OSS); (iii) surprisingly, average loan size per borrower and age of MFIs do not have statistically significant correlation with OSS. The key recommendations are: (i) MFIs should focus on its professionality and increase its equity; (ii) related stakeholders such as State Bank of Vietnam should promote the enabling ecosystem for microfinance development to enhance poverty reduction and economic development.

Purpose - Micro-finance institutions (MFIs) are critical to Vietnam’s quest for poverty alleviation among the poor in the rural and agrarian communities. The current study attempts to investigate the impact of microfinance outreach programs undertaken by formal and semi-formal MFIs in Vietnam targeting the poor rural and agrarian communities. Research design, data, methodology - An enquiry was made as to whether the poor and rural communities accessed the micro credit offered by Government supported MFIs and NGOs through their microfinance outreach programs. Furthermore, the current study attempted to explore if the current mode of operations adopted by MFIs in Vietnam is sustainable. Results -The findings indicate that significant progress has been made in Vietnam to alleviate poverty among the poor rural communities through micro finance outreach programs. Conclusions - There are also pointers of MFIs sustainability in Vietnam. However, it still remains to be seen if the current sustainability pointers are long lasting without government subsidies or some international organizations financial support to microfinance outreach programs.