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Journal articles on the topic 'Financial performance Microfinance'
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1
Okeyo, Kennedy Omondi. "The Impact of Liquidity on the Financial Performance of Microfinance Institutions: Evidence from Mombasa Town, Kenya." Asian Journal of Economics, Business and Accounting 25, no. 5 (2025): 292–300. https://doi.org/10.9734/ajeba/2025/v25i51802.
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Microfinance institutions have encountered by difficulty determining the prime point or the level at which they can uphold its liquidity so that to augment its profitability. The difficulty becomes further distinct as good records of institutions particularly microfinance institutions are engaged with profit maximization hence they incline to disregard the significance of liquidity management. Near this end, the study tried to found the effect of liquidity on the financial performance of microfinance institutions in Mombasa town, Kenya. The study embraced descriptive research design. A regression model was used to determine the relationship between the financial performance and independent variables which included debtors, creditors and cash flow. The outcome shown that the correlation between liquidity and financial performance is strong with an A R2 of 54%. The research summarissed that liquidity management is a major contributor of the microfinance financial performance. However, it is significant for a firm to understand the effect of liquidity mechanisms on the microfinances financial performance and also commence deliberate measures to augment its liquidity level. In addition the research recommendend a further study on the role of liquidity on a microfinance financial performance by incorporating more liquidity variables.
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Daher, Lâma, and Erwan Le Saout. "Microfinance and Financial Performance." Strategic Change 22, no. 1-2 (2013): 31–45. http://dx.doi.org/10.1002/jsc.1920.
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Ouma, Cavine Onyango, Dr Daniel Makori, and Dr Moses Odhiambo Aluoch. "Firm Characteristics, Interest Rate And Financial Performance Of Microfinance Banks In Kenya." IOSR Journal of Economics and Finance 15, no. 5 (2024): 54–73. http://dx.doi.org/10.9790/5933-1505055473.
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Microfinance Banks gives the forte to improve the economic activity of low-income individuals and eliminate poverty, resulting in economic progress. However, microfinance's Banks financial performance in Kenya has declined over time. The objective of this study is to investigate firm characteristics, interest rate and financial performance of microfinance banks in Kenya. The study was grounded on buffer capital, efficiency structure and interest rate parity theories. The study research methodology rested on positivism research philosophy. Research design was explanatory non-experimental design. Secondary panel data was utilized. 13 microfinance banks in Kenya were target. Information was gathered using secondary data sources from microfinance banks accounting report from 2016 to 2022. Data was analysed using descriptive and inferential statistics. The study used multiple regressions and Pearson’s Product Moment Correlation analysis. All ethical considerations were appropriately observed. Findings indicated that adequacy of capital exerts a notable and direct effect on financial performance, underscoring the importance for microfinance banks in Kenya to prioritize maintaining sufficient capital levels to support their overall stability and financial outcomes. Conversely, quality of asset demonstrates a significant and adverse influence on performance financially, highlighting the need for microfinance banks to enhance their credit assessment processes to ensure the quality of their loan portfolios. The research revealed that efficiency of management has an insignificant direct influence on financial performance of Microfinance banks. To address this, microfinance banks are advised to invest in comprehensive management training programs and capacitybuilding initiatives to improve operational effectiveness and decision-making processes. Earning ability, on the other hand, exhibits a considerable and direct influence on financial performance. Microfinance banks should thus focus on continuous innovation of their products and services to enhance their earning potential and overall financial outcomes. Liquidity levels exhibit an insignificant and inverse effect on the financial performance outcomes. To mitigate potential risks, microfinance banks should establish comprehensive policies and procedures to monitor and manage liquidity effectively. Interestingly, the study reveals that the connection concerning firm-level attributes and financial outcomes for microfinance institutions in Kenya does not appear to be subject to a substantial moderating influence from interest rate movements. Therefore, the survey recommends that microfinance banks concentrate on improving governance structures, operational efficiency, risk management practices, and asset quality. This can be achieved through capacity-building programs, training initiatives, and adopting best practices from successful microfinance institutions. Strengthening these firm characteristics will enable microfinance banks to enhance their financial performance, irrespective of interest rate fluctuations
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Wanjala, Lucy Machuma, and Charity Njoka Dr. "PRUDENTIAL REGULATIONS AND FINANCIAL PERFORMANCE OF LICENCED MICROFINANCE BANKS IN KENYA." International Journal of Management and Commerce Innovations 12, no. 2 (2024): 65–70. https://doi.org/10.5281/zenodo.14172629.
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<strong>Abstract</strong><strong>:</strong> Microfinance enhances the financial capacity of the economically disadvantaged, often ignored by commercial banks and other lending institutions, by offering services such as credits, insurances, and savings, thereby encouraging self-employment. Due to various variables businesses encounter, guidelines, decrees, and rules are necessary to regulate their operations, ensuring a fair structure for all companies within a sector. This regulatory framework is essential for the financial industry, especially microfinance banks, to operate within set boundaries. This study examines the impact of prudential regulations on the financial performance of Kenyan microfinance banks. It specifically focuses on the effects of capital regulation on financial performance. Theoretical framework reviewed was stakeholder theory. The study's target population consisted of the fourteen (14) licensed microfinance banks in Kenya, employing a census of all these microfinance banks and an explanatory research design. The study utilized secondary data, which was sourced from the financial statements of selected microfinance banks in Kenya. This information encompassed data collected over a seven-year period, from 2015 to 2022. Findings revealed that capital regulation significantly (ρ = 0.013) and negatively (β = -3.3184) impacts financial performance. The study recommends that microfinance banks recognize the importance of capital management and ensure regulatory compliance. <strong>Keywords:</strong> Capital Regulation, Microfinance Bank, Financial Performance. <strong>Title:</strong> PRUDENTIAL REGULATIONS AND FINANCIAL PERFORMANCE OF LICENCED MICROFINANCE BANKS IN KENYA <strong>Author:</strong> Wanjala Lucy Machuma, Dr. Charity Njoka <strong>International Journal of Management and Commerce Innovations </strong> <strong>ISSN 2348-7585 (Online)</strong> <strong>Vol. 12, Issue 2, October 2024 - March 2025</strong> <strong>Page No: 65-70</strong> <strong>Research Publish Journals</strong> <strong>Website: www.researchpublish.com</strong> <strong>Published Date: 16-November-2024</strong> <strong>DOI: https://doi.org/10.5281/zenodo.14172629</strong> <strong>Paper Download Link (Source)</strong> <strong>https://www.researchpublish.com/papers/prudential-regulations-and-financial-performance-of-licenced-microfinance-banks-in-kenya</strong>
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Kelvin, Chenya, and Jared Bitange Bogonko Dr. "Effect of Credit Analysis on Financial Performance of Microfinance Institutions in Eldoret Town, Kenya." American Based Research Journal 7, no. 12 (2018): 47–59. https://doi.org/10.5281/zenodo.3456191.
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<em>Microfinance institutions industry plays a vital role in the economy by giving loans to poor people with the aim of reducing poverty level hence economic growth. A major threat facing microfinance institutions is the increase of Non-Performing Loans (NPL) that leads to the collapse of microfinance institutions. The purpose of this research is to determine the effect of credit analysis on the financial performance of microfinance institutions in Eldoret town, Kenya. The study was founded on the 5C’s model of client appraisal. The target population of the study was 25 licensed microfinance institutions in Eldoret town according to AMFI (Association of Microfinance Institutions). A sample of 240 respondents was selected based on proportionate sample size categorized into branch managers, senior credit officers and credit officers using stratified sampling and simple random sampling (SRS).The study used primary and secondary data. Questionnaires were used to collect primary data while secondary data was obtained from the annual performance of the respective institutions financial statements. Data was analyzed and presented using descriptive statistics and inferential statistics. Inferential statistics were used to analyze data using correlation, ANOVA while regression analysis was used to test the effect of the independent variable and dependent variable using statistical package for social sciences (SPSS) version 21. The findings revealed positive and significance relationship between the variable set at P<0.05. Credit Analysis (β=0.591; p=0.000<0.05). The findings will be helpful to the microfinance institutions to be able to understand the effect of credit analysis on the financial performance of microfinance institutions, the credit department of microfinance institutions will be able to know the importance of implementing credit policy. It can be concluded that good credit analysis measures be put in place by MFI’s because it influences financial performance hence good health</em>
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Aslam, Mohammad, Senthil Kumar, and Shahryar Sorooshian. "Social Versus Financial Performance of Microfinance: Bangladesh Perspective." Research in World Economy 10, no. 3 (2018): 263. http://dx.doi.org/10.5430/rwe.v10n3p263.
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Microfinance is a tool designed for poverty alleviation by providing financial services more specifically small credit to the poor household for income generating activities. One of the better ways to help poor people for poverty alleviation is through giving them financial services that cannot be done in traditional banking system. However, there is a big question whether it is possible to provide those services for a financial institution without being sustainable financially. How far it can go with free lunch that is depending on donors’ fund. These two patterns place microfinance at the intersection. One may wonder whether the microfinance compromises a trade-off between serving the poor as social objective and attaining financial sustainability as financial objective. If microfinance institute wishes to get financial sustainability through profit maximization rather ignoring intended social objective of alleviating poverty, than it loses its momentum and becomes like other traditional financial institute. Fulfilling social objective with financial sustainability will be the optimum outcome of microfinance. Microfinance has been pioneered primarily in Bangladesh and later replicated in rest of the world. By this time, over 33 million of clients are being served with various financial and non-financial services by over 700 registered microfinance institute in Bangladesh. This study intent to measure the social outreach versus financial sustainability of microfinance institute in Bangladesh through panel data analysis. To do this, we have analyzed the relationship between financial performance and depth of outreach of top 20 microfinance institutes of Bangladesh from 2015 to 2017. Our results show that the relationship is positive or neutral in some cases. Therefore, microfinance in Bangladesh has been attaining both social and financial objectives and there appears no mission drift.
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Njagi, Joram Nyaga, and Charity Njoka. "Microfinance Reforms and Financial Inclusion in Kenya." International Journal of Current Aspects in Finance, Banking and Accounting 3, no. 1 (2021): 54–72. http://dx.doi.org/10.35942/ijcfa.v3i1.181.
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Statistics indicate that about 1.7 billion people can’t access a savings account and slightly above 200 million small and medium-sized enterprises are deprived access to satisfactory financial solution. Kenya views microfinances as a development instrument for poverty lessening and economic growth through ensuring financial inclusion. It is due to the acceptance of this vital role of Microfinance that Kenya has undertaken strategic microfinance reforms and regulations aimed at promoting financial inclusion through microfinance business. The research’s general objective is to examine the effect of microfinance reforms on financial inclusion. Specifically, to determine the influence of microfinance transformation from non-deposit taking into a deposit-taking microfinance institutions on financial inclusion, to examine the association between microfinance board characteristics and public trust, to investigate the effect of microfinance licensing requirements on financial inclusion and to examine the effect of microfinance prudential standards requirements on financial inclusion in Kenya. The research adopted Financial Intermediation Theory and Public Interest Theory of Regulation. This research utilized descriptive research design and the population targeted included all the thirteen Microfinance institutions, which were licensed by the central bank of Kenya as at 2018. The study used purposive sampling to select six microfinance banks. Both descriptive and inferential statistics were done by use of multiple linear regression analysis. The research results indicated that microfinance transformation (pvalue=0.001), board characteristics (pvalue=0.042), licensing requirements (pvalue=0.035) and prudential standards (pvalue=0.002) significantly influenced financial inclusion. Results from regression analysis indicated a strong relationship between microfinance transformation, board characteristics, licensing requirements and prudential standards and financial inclusion. The study concluded that financial inclusion in micro financial institutions increases when there is sound microfinance transformation, board characteristics, legal requirements, and prudential standards. From the findings, the study recommended that micro financial institutions should support institutions reform functions and processes. Further the study recommended that micro financial institutions should recruit adequate and proficient workers and offer satisfactory training as well as certification for professional appreciation on strategies for microfinance reform processes and their influence on the financial inclusion of the micro financial institution. The research recommends that board members should be reliable and open so as to substantially contribute to financial performance.
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Ghising, Tilak. "Social Performance Management and Sustainability of Microfinance Institutions." International Research Journal of MMC 3, no. 4 (2022): 17–20. http://dx.doi.org/10.3126/irjmmc.v3i4.48858.
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Social performance management refers to the ability to achieve social goals by putting customers at the center of strategy and operations in microfinance institutions. The social performance of a microfinance institution means its effectiveness in achieving social goals and creating value for customers. This is just one aspect of social performance management. Social performance management examines the whole process through which an effect occurs. In the present study, social performance is considered as an assessment of social goals such as targeting the poor and marginalized, an adaptation of services that deliver economic benefits to customers, and the environment, and employees to improve social responsibility towards customers and the community. The overall performance of microfinance institutions contributes to the long-term sustainability of the organization. Sustainability of microfinance institutions means the long-term continuation of the microfinance program, which includes continuity of financial and non-financial services of microfinance institutions. The sustainability of microfinance institutions are measured by using a portfolio, performance, financial management, and profit-to-financial ratio. In the present study, the sustainability of microfinance considered as a long-term continuation of the program that benefits all stakeholders in the microfinance sector and society. Most microfinance institutions devote their efforts to achieving the social and financial goals of the organization. Social performance facilitates progress in achieving the social goals of microfinance institutions. As such, sustainability is a dynamic concept that aims to meet the expected cost of all programs and return on investment.
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Iqbal, Mehree, Nabila Nisha, and Afrin Rifat. "A Comparative Integration Study of Performance Metrics in Microfinance." International Journal of Information Systems in the Service Sector 12, no. 3 (2020): 55–73. http://dx.doi.org/10.4018/ijisss.2020070104.
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This study aims to understand the cause-and-effect relationship between financial and non-financial measures under a balanced scorecard (BSC) model in the microfinance sector of Bangladesh. Structural equation modeling is employed to test non-financial relationships hypothesized under BSC model and one sample t-tests are conducted to further relate non-financial variables to the financial performance variable for two microfinance providers. While all non-financial variables share positive and significant relationships, findings show that customer perspective and internal business process factors are quite strong and more evident for Grameen Bank than a cooperative bank. As such, microfinance providers which will improve their non-financial perspectives can ultimately benefit from increased financial performance. The article draws attention to microfinance providers so that they can address shortcomings in their current performance measurement systems and identify mechanisms that can help them improve their financial performances. Implications and future directions are discussed too.
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A. O., Olukole,, Bello, A. O., and Ishola, J. O. "Financial Inclusion and Organizational Performance: Evidence from Microfinance Banks." African Journal of Accounting and Financial Research 7, no. 4 (2024): 185–202. http://dx.doi.org/10.52589/ajafr-embkz5vr.
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Microfinance banks make sound contributions to economic growth and development as well as enhanced employment creation. The study aimed to determine the effects of financial inclusion measures: savings, affordable credits and financial advice on micro-finance banks performance measures (financial and operational) in Lagos State, Nigeria. Survey research design was adopted and the use of the multi-regression method of analysis was employed to analyse the generated data. The sample size was 386 and the sampling technique adopted was the convenience method. The field data generated were normalized, valid and reliable for this study. Findings revealed that financial inclusion measures like savings, affordable credits and financial advice significantly enhance both financial and operational performances of microfinance in Lagos State, with F-statistics (2, 343) = 120.241, p = 0.001 (p<0.05) and F-statistics (2, 343) = 211.814, p = 0.003 (p<0.05) respectively. The study concluded that financial inclusion measures like savings, affordable credits and financial advice improve microfinance banks performance via financial and operational in Lagos State, Nigeria. Thus, the study recommended that microfinance banks policymakers and management should embrace financial inclusion measures such as savings, affordable credits and financial advice in order to enhance financial and operational microfinance performance in Lagos State.
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Muriithi Njue, Alex, Samuel Nduati Kariuki, and Duncan Mugambi Njeru. "Liquidity Management and Financial Performance of Microfinance Institutions in Kenya." Journal of Social Sciences Research, no. 611 (November 19, 2020): 943–53. http://dx.doi.org/10.32861/jssr.611.943.953.
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Sound liquidity management is integral for any financial institution’s stability and profitability, since deteriorating liquidity management is the most frequent cause of poor financial performance. As with any financial institution, the biggest risk in microfinance sector is lending money and not getting it back leading to liquidity problems as most of them have no access to lender of the last resort which is the Central Bank of Kenya. The study sought to investigate the effect of liquidity management on financial performance of microfinance institutions in Kenya. The target population of the study was all the twenty-six microfinance in Kenya that are members of Association of Microfinance Institutions and were licensed by the Central Bank of Kenya as at 2017. A census of all the twenty-six 26 Microfinance Institutions in Kenya was conducted for five years from 2012 to 2016. Secondary data on the study variables was gathered from the audited financial statements of the Microfinance Institutions. The study employed random effect model on a 5-year panel data from 2012 to 2016 on all the 26 Microfinance Institutions in Kenya. The study found a positive relationship between capital adequacy and financial performance and a negative relationship between asset quality, maturity gap and financial performance. The study would help Microfinance Institutions as they would use the research findings to develop liquidity management strategies to enable Microfinance Institutions improve on their financial performance.
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Panditharathna, K. M., and R. P. C. R. Rajapakse. "Mainstreaming Microfinance: Balancing Financial Performance and Outreach." International Journal of Accounting and Business Finance 10, no. 1 (2024): 29–48. http://dx.doi.org/10.4038/ijabf.v10i1.150.
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There is an unsolved dilemma in the Sri Lankan microfinance sector: whether microfinance institutions target low-income earners or seek profitability. To contribute to this debate, this research investigates the effect of financial performance on outreach and the effect of outreach on financial performance. Balancing financial performance and outreach of microfinance institutions have been conducted in various countries and regions, but specifically not for Sri Lanka after implementing No.06 of 2016 Microfinance Act. This study used an empirical data set for ten years, from 2010 to 2019. Data was collected from 16 MFIs and the panel data regression model was used for the analysis. According to the results MFIs can achieve financial and social objectives simultaneously when serving a larger number of customers and a high percentage of female borrowers. But providing services to the core poor people diminishes their financial performance. As per the findings, policy makers are required to make a roadmap to protect both customers and organization financial sustainability. This study emphasizes the importance of having a proper reporting system for the microfinance sector and future research may wish to consider more MFIs by considering a long period and future research can occupy financial performance and outreach variables which are good at forecasting.
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Jerono, Alice, and Tobias Olweny. "Financial Risk Management Practices on Financial Performance of Microfinance Institutions in Kiambu County, Kenya." International Journal of Finance 8, no. 2 (2023): 1–26. http://dx.doi.org/10.47941/ijf.1246.
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Purpose: MFIs are subject to financial risks, just like all other financial institutions. This is intimately tied to their primary businesses of managing credit and accepting deposits. Therefore, risk management is crucial for MFIs in order to maximize their return on investment. The current study sought to establish the effect of financial risk management practices on financial performance of microfinance institutions in Kiambu County, Kenya. The study focused on establishing the effect of liquidity risk management practices, operational risk management practices, credit risk management practices, and market risk management practices on financial performance of microfinance institutions in Kiambu County, Kenya. The theories anchoring the study comprised of Risk Management Theory, Extreme Value Theory, Credit Risk Theory, and Capital Market Theory.
 Methodology: A descriptive survey research design was adopted in the study. The target population comprised of 31registered microfinance institutions operating in Kiambu County. The unit of observation comprised of Risk and Compliance Manager, Finance Manager, Operations Manager, Credit Manager, and Business Development Manager from each of the microfinance institution making a total of 155 respondents. A census approach was adopted in the study where all the registered microfinance institutions were involved in the study. Both primary and secondary data was employed in the study where 5-point Likert scale questionnaires were employed to gather primary data while a secondary data collection sheet was utilized to gather secondary data. Both descriptive and inferential statistics were used to analyze the collected data. The statistics were generated by help of Statistical Package for Social Scientist and MS Excel.
 Findings: The results of the analysis revealed that Liquidity Risk Management Practices, Operational Risk Management Practices, Credit Risk Management Practices, and Market Risk Management Practices positively and significantly affects financial performances of microfinance institutions in Kiambu County, Kenya as shown by beta values of 0.401, 0.309, 0.497 and 0.351 and significant values of 0.000. 0.001, 0.000 and 0.006 respectively.
 Unique contribution to theory, practice and policy: The results implies that when each of the independent variable is increased with one unit, financial performance of the microfinance institutions increases with the respective beta value of the independent variable. The results led to conclusions that liquidity risk management practices, operational risk management practices, credit risk management practices, and market risk management practices bears appositive and significant effect on financial performance of microfinance institutions in Kiambu County. The study provided recommendations to the management of the microfinance institutions to enhance their practices in areas of liquidity risk management, operational risk management, credit risk management, and market risk management to improve financial performance to a positive and significant level.
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Mbu, Daniel Tambi, and Defo Eddy Damaris Nono. "Agricultural Credit Risk Management and Microfinance Performance in Cameroon." Kardan Journal of Economics and Management Sciences 1, no. 3 (2018): 94–117. https://doi.org/10.5281/zenodo.6640693.
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Risk management with a view to improving financial performance is one of the major challenges currently faced by Microfinance Institutions. Methodologically, the study make used of the multiple correspondence analyses to construct an agricultural credit risk management indicator and used ordered probit model to estimate the result, using data collected on a sample of 100 microfinance personnel. The result shows that risk management has a positive and significant impact on the financial performance of Microfinance Institutions in Cameroon. In terms of policy, lenders should intensify follow up on borrowers in order to minimize credit risk, while the decision makers should subsidize Microfinance Institutions and farmers to alleviate poverty and reduce interest rate.
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Bi, Zohra, and Shyam Lal Dev Pandey. "COMPARISON OF PERFORMANCE OF MICROFINANCE INSTITUTIONS WITH COMMERCIAL BANKS IN INDIA." Australian Journal of Business and Management Research 01, no. 06 (2012): 110–20. http://dx.doi.org/10.52283/nswrca.ajbmr.20110106a12.
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Microfinance in India has been viewed as a development tool which would alleviate poverty and enhance growth of the country through financial inclusion. Out of 6 lakh villages in India, only approximately 50000 have access to finance. India is a country which has the highest number of households which are excluded from banking. With the Andhra crisis of microfinance institutions and issues that microfinance institutions have a mission drift, the aim of the paper is to study the performance and efficiency of microfinance. A sample of microfinance institutions in India have been selected based on their ratings given by microfinance information exchange (MIX) for the study. The performance of these sample MFIs as well as their performance with respect to commercial banks in India have been studied using statistically tools. A microfinance institution is measured for financial sustainability based on its good financial accounts and the recognized accounting practices they follow according to Meyer (2002). Data for the microfinance institutions have been collected from Microfinance information exchange (MIX) where few of the MFIs have started reported their financial data. The MIX has classified the MFIs based on various parameters such as level of disclosure, financial parameters etc and rated them accordingly. Out of the 88 MFIs in India reported on MIX, 24 MFIs are taken as samples, these samples taken were five star rated by MIX. The financial parameters of these MFIs are studied and compared with the financial parameters of commercial banks and their financial performance can be analyzed. The various parameters taken for analyzing the financial performance of MFIs and banks include: Financial structure, Profitability and Efficiency.
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Abdullah, W. Muhammad Zainuddin B. Wan, Wan Nur Rahini Aznie Bt Zainudin, Sarina Binti Ismail, and Hafiz Muhammad Zia-ul-haq. "The Impact of Microfinance Services on Malaysian B40 Households’ Socioeconomic Performance: A Moderated Mediation Analysis." International Journal of Sustainable Development and Planning 17, no. 6 (2022): 1983–96. http://dx.doi.org/10.18280/ijsdp.170634.
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This research examines the influence of microfinance services on the socioeconomic performance of Malaysian B40 households, which are considered vulnerable communities in Malaysia. Mainly, it explores the mediating role of entrepreneurial competencies and financial management practices in the relationship of microfinance services with households’ economic well-being, entrepreneurial success, and social wellbeing. Likewise, this research also examines the moderating role of microfinance institutions’ service efficiency in the success of microfinance services to improve households’ socioeconomic outcomes. The responses were collected from the participants of Amanah Ikhtiar Malaysia, the largest microfinance institution serving the low-income population of Malaysia. Employing the structural equation modelling approach, results show that microfinance financial services and non-financial services positively influence households’ socioeconomic performance through entrepreneurial competencies and financial management practices. On the other hand, microfinance financial services are also found to have significant direct influence on households’ socioeconomic performance. Further, results also indicate that microfinance institutions’ service efficiency positively moderates the influence of financial services to improve households’ socioeconomic performance. This is novel research that introduces human capital development as an underlying mechanism in the household economic portfolio model, suggesting that microfinance interventions develop human capabilities among their participants, which further assist them in the efficient management of financial and business affairs, thus, improving socioeconomic outcomes.
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Mueni, Lucia, Gordon Opuodho, and Agnes Wanjiru Njeru. "Credit Risk and Financial Performance of Deposit Taking Microfinance Banks Kenya." International Journal of Social Science and Humanities Research (IJSSHR) ISSN 2959-7056 (o); 2959-7048 (p) 3, no. 1 (2025): 112–25. https://doi.org/10.61108/ijsshr.v3i1.158.
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Microfinance banks provide small-scale financial services, including loans, savings, and money transfers, to marginalized and low-income communities. However, they face significant credit risk due to borrowers' limited financial capacity and unstable income sources. This risk is heightened by continuous internal and external changes, such as technological advancements, which can impact financial performance. To maintain stability and profitability, microfinance banks must effectively measure and manage credit risk exposures that threaten their viability. Therefore, this study sought to examine how credit risk affects the financial performance of deposits-taking microfinance banks in Kenya. The study adopted a positivism research philosophy and a panel data research design. The study's target population was 80 MFIs, of which only 8 deposit taking microfinance banks, were studied, licensed and members of Association of Microfinance Institutions (AMFI) from 2012 to 2021. The study used both descriptive and inferential statistics in the analysis of data with the help of statistical software STATA. The findings indicate that credit risk has a positive and significant effect on the financial performance of deposit-taking microfinance banks in Kenya. In addition, bank size has a significant moderating effect on the relationship between financial risks and financial performance of Kenya's deposit-taking microfinance banks. The study recommends that Kenya's deposit-taking microfinance banks should enhance loan administration, implement strict lending criteria, continuously monitor credit risk, and regularly assess the loan-to-deposit ratio to improve asset quality, reduce non-performing loan losses, and ultimately increase profitability. In addition, Kenya's deposit-taking microfinance banks should consider bank size when developing credit risk management strategies, as it significantly influences the relationship between credit risk and financial performance. Tailoring credit risk policies to account for the scale of operations could enhance financial stability and profitability
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Mueni, Lucia, Gordon Opuodho, and Agnes Wanjiru Njeru. "Market Risk and Financial Performance of Deposit Taking Micro Finance Banks Kenya." International Journal of Innovations and Interdisciplinary Research (IJIIR) ISSN 3005-4885 (p);3005-4893(o) 3, no. 1 (2025): 1–14. https://doi.org/10.61108/ijiir.v3i1.159.
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Microfinance banks provide small-scale financial services, including loans, savings, and money transfers, to marginalized communities. However, they face significant credit risk due to unsecured lending and the limited credit history of borrowers. This risk is heightened by rapid technological changes and evolving market conditions, which threaten their financial stability. To maintain profitability, microfinance banks must adopt effective credit risk management strategies to assess and mitigate exposures that could impact their financial performance. Therefore, this study sought to examine how market risk affects the financial performance of deposits-taking microfinance banks in Kenya. The study adopted a positivism research philosophy and a panel data research design. The study's target population was 80 MFIs, of which only 8 deposit taking microfinance banks, were studied, licensed and members of Association of Microfinance Institutions (AMFI) from 2012 to 2021. The study used both descriptive and inferential statistics in the analysis of data with the help of statistical software STATA. The findings indicate that market risk has a positive and significant effect on the financial performance of deposit-taking microfinance banks in Kenya. In addition, bank size has a significant moderating effect on the relationship between market risk and financial performance of Kenya's deposit-taking microfinance banks. The study recommends that Kenya's deposit-taking microfinance banks should implement tailored risk management approaches and continuous monitoring to effectively manage market risk and maintain financial stability. In addition, bank size should be considered when formulating risk management strategies, as it significantly moderates the relationship between financial risks and financial performance.
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Bin, Anyekezeh Kum-Ngong. "The Interrelation between Corporate Governance Practises and the Financial Performance of Microfinance Institutions in CEMAC." Advances in Social Sciences Research Journal 11, no. 11 (2024): 154–72. https://doi.org/10.14738/assrj.1111.17896.
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This study aims to examine the relationship between corporate governance tools—specifically board size, board gender diversity, capital structure, ownership structure, and audit—and financial performance of microfinance institutions as measured by Return on Assets (ROA) and Operational Self-Sufficiency (OSS). Quantitative data is employed to identify the relationship between the variables. A dataset comprising forty-four microfinance institutes extracted from the Mix Market database for the period 2000 to 2021 is utilised. The research identified correlations between Microfinance Institutions’ financial performance and their board characteristics, capital structure, ownership structure and audit. The exploratory variables all produced significant results. The study identified significant relationships between the examined Corporate Governance practices and the financial performance of microfinance institutions in CEMAC. Capital structure positively influences the ROA and the constructed financial performance index but negatively influences the OSS of microfinance institutions in CEMAC when ownership structure is accounted for and audit is not accounted for. Ownership structure (those which have NGO and NBFI forms) positively influences the ROA and the constructed financial performance but negatively influences the OSS of microfinance institutions to a significant extent. Constructed board characteristics index (board size and board gender diversity) positively influences the ROA and the constructed financial performance index but negatively influences the OSS of microfinance institutions in CEMAC when ownership structure is accounted for and audit is not accounted for. Microfinance size has a positive effect on ROA and OSS but a negative one on the computed finance performance index. When audit is accounted for excluding ownership structure, we conclude that capital structure positively influences the OSS and the constructed financial performance index but negatively influences the ROA of microfinance institutions in CEMAC. The constructed board characteristics index (board size and board gender diversity) positively influences the OSS and the constructed financial performance index but negatively influences the ROA of microfinance institutions in CEMAC when audit is accounted for and ownership structure not. Being audited by large firms leads to a decrease in OSS, an increase in ROA and a general decrease in the constructed financial performance index in microfinance institutions in CEMAC when ownership structure is not considered. This study highlights the significance of corporate governance tools and their effectiveness in the success of organizations.
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Kadima, Aggrey, Mary Nelima Sindani, and Muli Maingi. "Credit Risk Management on Financial Performance of Selected Microfinance Institutions." African Journal of Empirical Research 4, no. 2 (2023): 778–84. http://dx.doi.org/10.51867/ajernet.4.2.79.
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The purpose of this study was to look at the impact of credit risk management on the financial performance of a few Kenyan microfinance firms. The study's approach was a descriptive survey research design and a panel data analysis technique. The study comprised credit managers from all 52 Kenyan microfinance institutions registered in the Association of Microfinance Institutions in Kenya (AMFI) database. The study included all of the institutions that were targeted. The questionnaire, which had previously been tested on local microfinance banks in Kakamega County, was used to collect data. Data analysis included regression analysis and correlation. Throughout the data collection process, the researcher observed integrity. Tables were used to present the study's findings. According to the model summary, credit risk management accounts for 49.1% of the variance in the financial performance of Kenyan MFIs, while other factors not included in the study model account for the remaining 50.9%. With a p-value of 0.01 that is statistically significant. Multiple linear regression analysis revealed that a one-unit change in credit risk management resulted in a significant improvement of 0.672 units in microfinance institution performance (= 0.672 (0.087); at p.01). The study found that prudent and effective credit risk management boosts net profit margins, return on capital invested, and cash flow. The study adds to existing theories by emphasizing the importance of credit risk management in microfinance, lays the groundwork for future research, and advises Kenyan microfinance organizations to invest in efficient credit risk management to improve their financial performance. The report also suggests that studies on Savings and Credit Cooperative Societies (SACCOs) be conducted to compare study findings and that the Association of Microfinance Institutions do studies on non-registered microfinance across the country.
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Aarthi, S. R., and Dr M. Sudha Paulin. "A STUDY ON FINANCIAL PERFORMANCE OF S.M.I.L.E MICROFINANCE LIMITED." International Journal of Engineering Applied Sciences and Technology 6, no. 11 (2022): 185–89. http://dx.doi.org/10.33564/ijeast.2022.v06i11.035.
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Microfinance at first has been a type of deliberate assistance to the most denied populace. In any case, today it addresses a market answer for alleviation of destitution and goes about as a turn of events and financial device in achieving monetary consideration in India. Microfinance has arisen as a practical choice to come to the until recently unreached for their social and financial strengthening through friendly and monetary inter- mediation. The establishments that are giving microfinance administrations, for example, reserve funds, credit, protection and settlement administrations to poor are called Microfinance Institutions (MFIs). The review focuses on investigating the monetary presentation of S.M.I.L.E MICROFINANCE Restricted. The information have been gathered from the Microfinance Information Trade from the financial year 2015 to 2019. The measurable devices, to be specific, Descriptive insights and development rates have been utilized for investigating the information.. As far as in general monetary execution, Indian MFIs have better ROE and OSS. Indian MFIs have shown higher monetary income by resources, the yield on gross portfolio (ostensible) and lower working cost by resources, yet at the same time it couldn't cover the complete cost and monetary costs. In truth, Indian MFIs have uncovered better effectiveness and efficiency as estimated by working cost by advance portfolio, normal compensation by GNI per capita and advances per staff part.
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Kolloju, Adithya Kiran, and Michele Meoli. "Efficiencies of Faith and Secular Microfinance Institutions in Regions of Asia, Africa, and Latin America: A Two-Stage Dual Efficiency Bootstrap DEA Approach." Economies 10, no. 3 (2022): 66. http://dx.doi.org/10.3390/economies10030066.
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Purpose: the objective is to measure the financial and social performance of 127 microfinance institutions (MFIs) and observe the effects with explanatory factors such as “type”, “geography region”, and “secular and faith” variables. Design/methodology/approach: The time-series performance analysis of microfinance institutions is determined in two stages. In the first stage, both the social and financial efficiencies are measured with Data Envelopment Analysis (DEA) approach. The two explanatory factors along with faith and secular variables show the effect on these determined efficiencies by the second stage of the Tobit regression Random effect Model. Findings: Financial performance is greater than the social performance from the first stage analysis. When considering the explanatory variables, the social performances are not significant with religious factors. When the regression is performed in a group, the financial score is more significant with religious and other explanatory variables. Faith-based and secular-based microfinance institutions are strongly significant if the performances (efficiencies) are highly maintained. Originality/Value: faith and secular variables are identified based on the background/history information of each microfinance institution (MFI).
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D.V, Naumika, and Priyonkon Chatterjee. "IMPACT OF MICROFINANCE ON RURAL ENTREPRENEURSHIP IN INDIA." International Journal of Advanced Research 13, no. 06 (2025): 460–64. https://doi.org/10.21474/ijar01/21104.
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This research paper provides insights over the use of microfinance in rural enterprise in India for the years 2019-20 to 2022-23 and the support of NABARD in financing such institutions through loans, and analysing various factors of why the impact of microfinance is not well spread across various regions of India. It analyses how microfinance, the financial services provided to low-income individuals, contributes to rural regions entrepreneurship of India to develop through the various government schemes that is prevailing for the years of 2019-2023. It further goes on to evaluate the entrepreneurial institutions who received the most and the least microfinances through government schemes and region wise analysis of the number of microfinances provided through NABARD and the disparities and the reasons for such disparities in specific regions of India. The research paper, hence provides an overview of the performance of microfinance in the recent years and its impact on rural entrepreneurship,
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Fadikpe, Amidou Ayinla Akangbe, Richard Danquah, Mohammed Aidoo, Dejene Adugna Chomen, Richard Yankey, and Xie Dongmei. "Linkages between social and financial performance: Evidence from Sub-Saharan Africa microfinance institutions." PLOS ONE 17, no. 3 (2022): e0261326. http://dx.doi.org/10.1371/journal.pone.0261326.
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Microfinance Institutions provide financial services to low-income clients and the poor who are excluded from formal financial institutions. Hence, the sustainability of microfinance institutions (MFIs) remains essential. This study examines the relationship between social and financial performance and whether there is a trade-off between both objectives after the 2008 global financial crisis. The study used 735 observations from 105 Microfinance Institutions across 26 countries in Sub-Saharan Africa from 2011 to 2017 and employed the Generalized Method of Moment and Seeming Unrelated Regression for the analyses. The results indicate that increasing the number of customers [breadth of outreach increased the financial performance (return on equity)]. The result also showed that the Percentage of Female Borrowers contributes to the sustainability of Microfinance Institutions due to their higher loan repayment rate than males. In addition, our results document a trade-off between the Depth of Outreach and Operational Self-Sustainability among Microfinance Institutions. The study recommends the following: 1) Microfinance institutions should purposefully increase credit facilities extended to female borrowers since that will make them sustainable. 2) Governments in Sub-Saharan African countries should provide increased financial support in the form of subsidies and tax holidays to Microfinance Institutions operating in very deprived areas, and 3) Management of Microfinance institutions on the continent should regularly re-train and upgrade their staff capacity to effectively assess and manage customers before and after extending credit to them to sustain the industry.
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Guo, Xing. "A Study on the Performance Evaluation System of Microfinance Companies Under Dual Objectives." Scientific and Social Research 4, no. 1 (2022): 67–79. http://dx.doi.org/10.36922/ssr.v4i1.1316.
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Microfinance companies are the result of China’s rural financial reform. Since their creation, they have been undertaking the responsibility of effectively allocating financial resources and guiding the flow of funds to rural areas and underdeveloped areas through the introduction of private capital. The emergence of microfinance companies has intensified the competition in rural financial market and built a new pattern of rural financial service systems. As a result driven by multiple objectives, these microfinance companies must face the issue of how to integrate microfinance services for the “three rurals” (rural economy, rural community, and rural residents) as well as small, medium, and micro enterprises with their own finances in a sustainable and effective manner. On the basis of dual objectives and with full consideration of the characteristics of China’s microfinance companies, this study has constructed a performance evaluation system exclusively for commercial microfinance companies in China by drawing on the performance evaluation system of foreign micro-credit institutions through analytic hierarchy process and Delphi method.
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Temesi, Godfrey Ashiali, Maniagi Musiega, and Mary Nelima Sindani. "Influence of Capital Risk on Financial Performance of Microfinance Institutions in Kenya." African Journal of Empirical Research 4, no. 2 (2023): 384–93. http://dx.doi.org/10.51867/ajernet.4.2.39.
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Microfinance Institutions (MFIs) services and activities in Kenya have helped the country reduce its poverty rate, but the country is still among the poorest in the world. Microfinance institutions in Kenya have also reported capital risk in terms of pricing since they have less flexibility to adjust prices due to their financial structure. The main objective of the study is to establish the influence of capital risk on the financial performance of microfinance institutions in Kenya. The study used a descriptive survey research design with a target population of 12 MFIs listed under the Central Bank of Kenya (CBK). The study used a census approach to sample the entire population. The study used secondary data from published CBK reports over a 7-year period from 2015 to 2021. Descriptive statistics are comprised of skewness, kurtosis, and jarque bera. Inferential statistics used were Pearson correlation and hierarchical regression. A study on financial risk factors and financial performance may be of value to the government in policy formation. The microfinance act policy formulators can use the study to ascertain contagious issues that need to be addressed, especially how to handle capital risk challenges. The study may assist the management of microfinance institutions in establishing the problems facing financial risk factors in their sector. Capital risk had a significant positive effect on the financial performance of the Nairobi Securities Exchange in Kenya (t =0.0346763, p<0.05). This model produced an R square of 0.378, implying that 3.78% of the variation in the risks of microfinance institutions is significantly affected by capital risk. Regarding microfinance size, the incorporation of IV*MV, thus interaction terms, moved R squared from 0.337 to 0.378, hence an increase of 0.041. The P value of 0.024 and an R squared increase of 0.041 shows that microfinance size has a moderatingly significant effect on the relationship between capital risk and the financial performance of microfinance institutions. The study rejected the null hypothesis. The findings guided the following recommendations: It was found that capital risk has a significant impact on financial performance; hence, microfinance firms should improve their assets so as to minimize the risks associated with their capital base.
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Fardowsa, Ibrein Ibrahim, and Kimutai Caroline. "BOARD CHARACTERISTICS AND FINANCIAL PERFORMANCE OF SELECTED MICROFINANCE BANKS IN KENYA." International Journal of Management and Commerce Innovations 11, no. 2 (2024): 368–78. https://doi.org/10.5281/zenodo.10829803.
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<strong>Abstract</strong><strong>:</strong> The study sought to examine the effect of board characteristics on financial performance of microfinance banks in Kenya. It delves into the effect of board size, gender representation, and board independence on the financial standing of these institutions. Theoretical framework comprises of agency, resource dependency, institutional and stewardship theories respectively. Research data was collected over time frame 2015-2022. To illuminate the hidden patterns and relationships within the data, a panel of secondary data extracted from audited financial reports and records was subjected to rigorous scrutiny. The outcome unveiled a positive but statistically insignificant effect of board size on financial performance; board composition of the selected banks affected the selected microfinance banks’ financial performance negatively with such effect being insignificant in Kenya; and board independence inversely but insignificantly affected these selected microfinance banks’ financial performance in Kenya. The survey suggests that the management of selected microfinance banks in Kenya should contemplate reducing the size of the board to enhance financial performance. <strong>Keywords:</strong> Board Characteristics, Board Size, Board Independence, Board Composition and Financial Performance. <strong>Title:</strong> BOARD CHARACTERISTICS AND FINANCIAL PERFORMANCE OF SELECTED MICROFINANCE BANKS IN KENYA <strong>Author:</strong> Fardowsa Ibrein Ibrahim, Caroline Kimutai <strong>International Journal of Management and Commerce Innovations </strong> <strong>ISSN 2348-7585 (Online)</strong> <strong>Vol. 11, Issue 2, October 2023 - March 2024</strong> <strong>Page No: 368-378</strong> <strong>Research Publish Journals</strong> <strong>Website: www.researchpublish.com</strong> <strong>Published Date: 18-March-2024</strong> <strong>DOI: https://doi.org/10.5281/zenodo.10829803</strong> <strong>Paper Download Link (Source)</strong> <strong>https://www.researchpublish.com/papers/board-characteristics-and-financial-performance-of-selected-microfinance-banks-in-kenya</strong>
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Tunio, Ghazala. "Performance of Microfinance Providers in Sindh, Pakistan: A Study of Formal and Informal Microfinance Institutes." IBT Journal of Business Studies 16, no. 1 (2020): 151–70. http://dx.doi.org/10.46745/ilma.jbs.2020.16.01.11.
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This research aims to analyze the performance of microfinance providers of the Sindh province of Pakistan. For this purpose, the formal and informal microfinance institutes were selected. Data was gathered from a sample of 150 managers of microfinance banks and institutions. In this research, the random sampling technique is used to collect the data through questionnaires. The OLS regression model is employed to analyze the data. The results of this study show that the number of branches, and less number of defaulters significantly affect the performance of microfinance institutes in Sindh, Pakistan. Moreover, the total cost also has an important relationship with the performance of microfinance organizations in Sindh. However, the study finds the interest rate, and more diversified financial services to have no significant impact on the performance of microfinance organizations. Due to the lack of financial information of the microfinance institutions in Sindh, there is dearth of the research on the performance of microfinance institutions. Rather than using only the published financial information this study relies on the information provided by the managers of the microfinance providers for the analysis. The results of this study have implications for the well-functioning of microfinance institutes, and for the government to achieve the poverty alleviation objectives in Pakistan
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Abid Hossain Shawon. "Analyzing the Contribution of Social Microfinance to Rural Financial Progress: Entrepreneurial and Social Dimensions in a Developing Nation." Indus Journal of Social Sciences 3, no. 1 (2025): 505–25. https://doi.org/10.59075/ijss.v3i1.717.
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Rural Financial development requires a comprehensive approach that addresses both immediate needs and structural challenges in an emerging economy. By focusing on economic empowerment and social protection, social microfinances are trying to create an environment where individuals and communities can not only escape poverty but also achieve sustainable growth and prosperity. This study examines the impact of social microfinance on rural development and poverty alleviation. The research also investigates key theoretical frameworks, including rural financial and institutional theory, and social capital theory, to assess the effectiveness of rural social microfinance institutions for sustainable development in this region. Utilizing secondary data from the Center for financial inclusion, spanning from 2019 to 2023. Through empirical analysis, the study identifies that critical financial component such as, institutional social performance, operational scale, information transparency, and the ratio of gross loan portfolios to total assets positively influence sustainable rural development outcomes. By combining both theoretical perspectives and empirical findings, this research underscores the dual objectives of social microfinance in Bangladesh, balancing social welfare goals with entrepreneurial strategies. The findings suggest that when rural social microfinance institutions operate with a social enterprise model, that not only significantly contribute to poverty reduction efforts but also ensure sustainable development without relying on subsidies.
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Le Saout, Erwan. "Performance of the Microfinance Investment Vehicles." Applied Economics and Finance 4, no. 6 (2017): 42. http://dx.doi.org/10.11114/aef.v4i6.2719.
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Over the last few years, the microfinance sector has seen its transformation. Microfinance institutions seek a wide range of sources of funding, while private investors seek not only social returns but also financial returns. This new approach has led to the emergence of microfinance investment funds and initial public offerings of certain Microfinance institutions. Microfinance now seems to be seen as a new investment opportunity by global investors.Aim of this paper is to study the performance of public Microfinance Investment Vehicles. Despite a significant currency risk, we find that the integration of microfinance assets diversifies the investor’s risks and improves the efficient frontier. We conclude that microfinance institutions, via investment vehicles, are likely to attract capital from socially responsible investors seeking new investment opportunities despite a sharp decline in the Sharpe ratio over the past few months.
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Aluodo, Francis, and Salome Musau. "Liquidity Management Practices and Financial Performance of Microfinance Banks in Nairobi City County, Kenya." International Journal of Current Aspects in Finance, Banking and Accounting 6, no. 2 (2024): 55–70. http://dx.doi.org/10.35942/s8dz3y62.
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Microfinance banks are financial institutions that provide loans, insurance, saving platforms and other financial products to various individuals. Thus, these institutions require sufficient liquid assets to enable them to meet their routine financial obligations. However, in Kenya, microfinance banks have been recording a declining trend regarding their financial performance over time, leading to grave concerns. Thus, this study aimed to assess cash management practices and their effect on Nairobi City County’s MFB's financial performance. The analysis and elucidation of the literature was facilitated by the examination of the Keynesian Liquidity theory. A descriptive research design with a regression analysis model was embraced in determining the predictor variable’s impact on the explained variable. Data review guide was then utilized to gather secondary data, which was obtained from the CBK and covered the years 2017 to 2022. According to the study, operational cash flow management and cash management significantly and favorably impacted the financial performance of Kenyan microfinance institutions. Nonetheless, the financial performance of Kenya's microfinance institutions was significantly impacted negatively by operational efficiency management. As per the study's findings, microfinance banks in Kenya carry out cash budget preparation, bank reconciliation, cash inflow and outflow recording, cash expense payment, and cash surplus investment. As a result, they manage their funds carefully. Furthermore, the stability and functioning of the financial system depend heavily on efficient cash flow management. It entails keeping an eye on money coming in from investments, sales, and outside funding sources as well as tracking money going out to pay for bills, obligations, and loan repayments. Microfinance banks are able to balance inflows and outflows, lower the risk of liquidity crises, and take advantage of growth possibilities by managing cash flow well. This allows microfinance institutions to make well-informed choices regarding debt management, expansion strategies, and investments—all of which are essential for overall financial success. To maximize the beneficial effects on financial performance, the study recommends adhering to the statutory minimum liquidity ratio. Since excessive liquidity and illiquidity reduce the institutions' profitability, microfinance banks should implement effective cash management procedures.
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Ahmed, Mushtaq, Muhammad Sheharyar, and Faheem Arshad. "A Dynamic Analysis of the Performance of Islamic Microfinance Institutions in OIC Countries-The Influence of Digitalization." Review of Applied Management and Social Sciences 6, no. 4 (2023): 669–85. http://dx.doi.org/10.47067/ramss.v6i4.357.
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The performance of microfinance institutions is debatable. Evidence shows that some microfinance institutions successfully achieve dual objectives, social and financial, while some fail to achieve them. Islamic microfinance institutions (IMFIs) are widely accepted in OIC countries as its products are based on Islamic principles, however its share is very small in the world. Therefore, this study aims to investigate the impact of macroeconomic, macro institutional factors and digitalization on the financial and social performance of Islamic microfinance institutions in OIC countries. Using panel data of 35 Islamic microfinance institutions from 2008 to 2019. The results found that macroeconomics and country-level institutional variables have mixed impact on the performance of Islamic microfinance institutions. In addition, digitization enhances the performance of (IMFIs). The study presents several policy recommendations for improvement in performance.
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Quayes, Shakil, and Tanweer Hasan. "Financial disclosure and performance of microfinance institutions." Journal of Accounting & Organizational Change 10, no. 3 (2014): 314–37. http://dx.doi.org/10.1108/jaoc-12-2011-0067.
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Purpose – The purpose of this paper is to analyze the relationship between financial disclosure and the financial performance of microfinance institutions (MFIs). Design/methodology/approach – The paper utilizes ordinary least squares method to analyze the impact of disclosure on financial performance, an ordered probit model to investigate the possible effect of financial performance on disclosure and utilizes a three-stage least squares method to delineate the endogenous relationship between disclosure and financial performance of MFIs. Findings – The paper finds that better disclosure has a statistically significant positive impact on operational performance of MFIs; second, it also shows that improved financial performance results in better financial disclosure. Keeping the endogenous nature of the relationship between disclosure and performance, the paper uses a three-stage least squares method to show that disclosure and financial performance positively affect each other simultaneously. Research limitations/implications – The paper attempts to delineate a positive association between better disclosure on financial performance of MFIs, which can be used for developing a better disclosure policy by management, formulating more effective guidelines for disclosure by the stakeholders and mandating more appropriate laws and uniform disclosure practice by regulators. Originality/value – This is the first study that uses a large number of MFIs from 75 countries; second, it uses a uniform scale of designating a disclosure rating (assigned by MIX Market) to show the relationship between disclosure and performance. Finally, it uses three-stage least squares method to address the possible endogeneity between disclosure and performance.
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Kaua, Caxton Gitonga, Thuita Thenya, and Jane Mutheu Mutune. "Analysis of Informal Microfinance Institutions Structures in Relation to Performance in Tharaka South Subcounty, Kenya." European Journal of Sustainable Development 9, no. 3 (2020): 457. http://dx.doi.org/10.14207/ejsd.2020.v9n3p457.
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Informal microfinance is the delivery of financial services mainly to low income people outside the regulation of the monetary authority. Despite their importance in development, no studies have undertaken a detailed analysis of structures and performance in informal microfinance institutions. This study aims to analyze structures and performance in informal microfinance institutions in Tharaka South Sub County. It uses descriptive study design and multi stage sampling design. Data analysis was done using thematic, descriptive and Kendall’s tau-b correlation analysis. An informal microfinance performance index was developed using inductive and hierarchical approaches. The study found the informal microfinance institutions are marked by high performance which is determined by their structures. Moreover, the study deduced that informal microfinance is a key policy strategy for poverty alleviation, financial inclusion, gender equity and resilience building since participants mainly include women and other vulnerable groups.
 Keywords: Capital, Livelihoods, Informal, Microfinance, Performance, social
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Gudjonsson, Sigurdur, Kari Kristinsson, Haukur Freyr Gylfason, and Inga Minelgaite. "FEMALE ADVANTAGE? MANAGEMENT AND FINANCIAL PERFORMANCE IN MICROFINANCE." Business: Theory and Practice 21, no. 1 (2020): 83–91. http://dx.doi.org/10.3846/btp.2020.11354.
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The purpose of the article is to investigate whether female presence in microfinance institutions’ management team, i.e. board members, managers and loan officers, will improve their financial performance. We combine financial data on MFIs that is available from the MIX Market database with original data on the gender composition of MFIs’ management team, who include board members, managers and loan officers. This original dataset of 223 MFIs is analyzed using Logit-Tobit regression models with return on assets (ROA) as the dependent variable and proportion of female board members, female loan officers and female managers as the main independent variables. We find that a higher proportion of female managers and female loan officers improve financial performance in microfinance, while a higher proportion of female board members does not. Our results indicate that a major contributor to the financial sustainability of microfinance institutions is having a higher rate of women in vital decision-making roles, especially lower level management positions.
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Shkodra, Jehona. "Financial performance of microfinance institutions in Kosovo." Journal of International Studies 12, no. 3 (2019): 31–37. http://dx.doi.org/10.14254/2071-8330.2019/12-3/3.
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Kalu, Emenike O., Bashabe Shieler, and Christian U. Amu. "Credit Risk Management and Financial Performance of Microfinance Institutions in Kampala, Uganda." Independent Journal of Management & Production 9, no. 1 (2018): 153. http://dx.doi.org/10.14807/ijmp.v9i1.658.
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The objective of this study was to evaluate whether relationship exist between credit risk management techniques and financial performance of microfinance institutions in Kampala, Uganda. Specifically, the study examined whether there is a relationship between credit risk identification, credit risk appraisal, credit risk monitoring, credit risk mitigation and financial performance of microfinance institutions in Kampala using sample of 60 members of staff in finance and credit departments of three licensed microfinance institutions in Kampala, Uganda namely Finca Uganda Ltd, Pride Microfinance Ltd, UGAFODE Microfinance Ltd. Primary data was collected using questionnaires and it comprised of closed ended questions. Secondary data was collected from the microfinance institutions (MDI’s) annual reports (2011 - 2015). Frequencies and descriptive statistics were used to analyse the population. Pearson linear correlation coefficient was adopted to examine relationship between credit risk management techniques and financial performance. The findings indicate that credit risk identification and credit risk appraisal has a strong positive relationship on financial performance of MDIs, while credit risk monitoring and credit risk mitigation have moderate significant positive relationship on financial performance of MDIs. The study recommends, among others, that the credit risk appraisal process should identify and analyse all loss exposures, and measure such loss exposures. This should guide in selection of technique or combination of techniques to handle each exposure. The study concludes that MDIs should continually emphasise effective credit risk identification, credit risk appraisal, credit risk monitoring, and credit risk mitigation techniques to enhance maximum financial performance.
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Singh, Silvia, Anushka Singh, Samyak Nakarmi, Icchya Shrestha, Subigya Ghimire, and Gaurav Sainju. "Comparative Analysis of Pre and Post merger: Effect on the Financial Performance of Microfinance Institution in Nepal." New Perspective: Journal of Business and Economics 6, no. 1 (2023): 99–107. http://dx.doi.org/10.3126/npjbe.v6i1.58924.
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There are no specific studies available on the impact of mergers and acquisitions on the financial performance of Microfinance Institutions in Nepal. 
 Other studies available on the impact of funds and investments on the financial performance of organizations However, these studies are not directly related to the impact of mergers and acquisitions on the financial performance of Microfinance Institutions in Nepal. 
 This study aims to analyze the effect of pre and post-merger financial performance of Microfinance Institutions (MFIs) in Nepal. The study has taken four merged Microfinance Institutions of Nepal as the sample. The study has used paired sample t-tests to analyze the data. The findings of the study showed that after the merger, the financial performance of the Microfinance Institutions in Nepal has not improved. The study found that there were no changes in the Earning per Share, Return on Equity, Return on Asset, Net profit Margin, Current Ratio, Net interest Margin and Price to Earnings Ratio. However, the study has found out that the Debt to Equity ratio has increased after the merger process. There are several studies available on the impact of mergers and acquisitions on the financial performance of banks in Nepal.
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Effendi, Syahrul, Idris Gautama So, Nugroho Juli Setiadi, and Gatot Soepriyanto. "Ambidextrous leadership and financial performance of Indonesian microfinance institutions: The role of business model and environmental dynamism." Problems and Perspectives in Management 22, no. 4 (2024): 487–97. https://doi.org/10.21511/ppm.22(4).2024.36.
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This study aims to investigate the relationship between ambidextrous leadership, business models, and financial performance of Indonesia’s microfinance institutions (MFIs) while also exploring the mediating role of business models and the moderating effect of environmental dynamism in this relationship. Data were collected from 104 microfinance institutions in Indonesia and analyzed using the mediation moderation procedure (ModMed) with macro Process 4.0. The results indicate a positive relationship between ambidextrous leadership, business model, and financial performance. As expected, the study also reveals that the MFI business model is positively related to financial performance and mediates the relationship between ambidextrous leadership and financial performance. The moderating analysis has confirmed the role of environmental dynamism in the relationship between business models and financial performance. The findings provide valuable insights for practitioners in the microfinance sector, suggesting that fostering ambidextrous leadership can enhance the effectiveness of business models, ultimately leading to improved financial performance. Moreover, this paper contributes to the existing literature by examining complex models on the relationship between ambidextrous leadership and financial performance by integrating business models and environmental dynamism within Indonesia’s microfinance institutions. AcknowledgmentBeasiswa Pendidikan Indonesia (BPI) supported this paper and its publication. We thank Lembaga Pengelola Dana Pendidikan (LPDP) and Balai Pembiayaan Pendidikan Tinggi (BPPT) Pusat Layanan Pembiayaan Pendidikan (PUSLAPDIK) for funding this article with grant number 03426/BPPT/BPI.06/9/2023.
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BIN SAIF, OSMAN, TAQADUS BASHIR, and SHAHAB AZIZ. "Role of Competition and Stakeholders in Driving Financial Performance: A Case of Microfinance Banks of Pakistan." International Review of Management and Business Research 9, no. 4 (2020): 299–308. http://dx.doi.org/10.30543/9-4(2020)-25.
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Theoretical and conceptual literature shows that stakeholder integration has some impact on the financial performance of the non-financial firms, while this study tests the above relationship in microfinance bank setting in Pakistan. The mediating role of competitive intensity has also been tested. The results shows that stakeholder integration has strong positive impact on financial performance while competitive intensity magnifies the impact on financial performance. Keywords: Stakeholder Integration, Competitive Intensity, Financial Performance, Microfinance Banks, Pakistan.
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BIN SAIF, OSMAN, TAQADUS BASHIR, and SHAHAB AZIZ. "Role of Competition and Stakeholders in Driving Financial Performance: A Case of Microfinance Banks of Pakistan." International Review of Management and Business Research 9, no. 4 (2020): 299–308. http://dx.doi.org/10.30543/9-4(2020)-25.
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Theoretical and conceptual literature shows that stakeholder integration has some impact on the financial performance of the non-financial firms, while this study tests the above relationship in microfinance bank setting in Pakistan. The mediating role of competitive intensity has also been tested. The results shows that stakeholder integration has strong positive impact on financial performance while competitive intensity magnifies the impact on financial performance. Keywords: Stakeholder Integration, Competitive Intensity, Financial Performance, Microfinance Banks, Pakistan.
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AGBOKLOU, Komlan Edem, and Burhan ÖZKAN. "Agricultural credit supply and the performance of microfinance institutions in southern Togo." Mediterranean Agricultural Sciences 36, no. 1 (2023): 47–51. http://dx.doi.org/10.29136/mediterranean.1247855.
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The problem of underfinancing in the agricultural sector has always been a subject of consideration for governments. Thus, for decades, programs have been implemented to eradicate poverty and facilitate access to financial services for the most disadvantaged segments of the population, represented mainly by the rural population. Among these programs, microfinance holds a predominant place. However, the latter is increasingly moving away from the agricultural sector, depending on its assessment of the risky nature of agricultural investments. This study sought to analyze the effect of agricultural credit supply on the performance of microfinance institutions (MFIs). Data from the two largest microfinance institutions (FUCEC-Togo and WAGES) were analyzed. The linear regression model was used for the analysis. The results show that the supply of agricultural credit has a negative impact on financial performance ratios of both MFIs in this study. The study recommended that microfinance institutions improve their agricultural financial services to adapt them to the needs of rural populations. The introduction of financial products should be adapted to the needs of producers and compatible with the profits of microfinance structures.
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Singh Thapa, Bharat, Neema Pandey, and Durga Datt Pathak. "Enhancing SME Performance Through Microfinance: Insights from Rural Nepal." Nepalese Journal of Insurance and Social Security 7, no. 1 (2024): 10–19. https://doi.org/10.58665/njiss.57.
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Purpose: The primary objective of this paper is to examine the effect of microfinance services on the performance of small and medium enterprises (SMEs) involved in microfinance programs in the Rupandehi district. Design/methodology/approach: A survey was conducted among 385 purposively chosen clients of Microfinance Institutions (MFIs) running SMEs using structured questionnaires incorporating demographic information and study variables. Data wereanalyzed using Structural equation modeling (SEM) through SmartPLS to investigate the effect of tailored microfinance services on selected performance indicators of SMEs. Findings: The research reveals positive and significant influences of microfinance services (measured by microloans, micro saving services, and skill development training) on the performance (measured by profit, sales growth, and employment creation) of SMEs. The findings emphasize the crucial role of integrated microfinance programs in enhancing SME profitability, employment, and sales growth. Conclusion: Microfinance services, especially micro-savings and training programs, significantly improve SME performance and sustainability by fostering employment, sales growth, and profitability by promoting skills development, financial stability, and efficient business practices. Implications: These findings present valuable insights for policymakers, microfinance practitioners, development partners, and SME owners seeking to enhance support mechanisms for the sustainability of small businesses. This paper contributessignificantly to academic literature, demonstrating the impact of microfinance services on financial performance and job creation using robust analytical methods to provide comprehensive insights. JEL Classification: G21, O16, O53, R11, P13
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Wediawati, Besse, Zulfina Adriani, Rike Setiawati, RTS. Ratnawati, and Erwita Dewi. "The Impact of Entrepreneurial, Financial, and Digital Literacy on MSME Performance." Jurnal Ilmiah Manajemen Kesatuan 13, no. 4 (2025): 2643–58. https://doi.org/10.37641/jimkes.v13i4.3411.
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This study investigates the influence of entrepreneurial, financial, and digital literacy on micro, small, and medium enterprise (MSME) performance, with microfinance acting as a moderating factor. Conducted among 158 MSMEs partnered with Islamic microfinance institutions in Jambi Province, Indonesia, the research adopts a quantitative approach using Partial Least Squares (PLS) to test the proposed model. The findings confirm that all three types of literacy significantly and positively affect business performance, with entrepreneurial literacy showing the strongest influence. Despite financial literacy being only moderately high and digital literacy still relatively low, both remain important predictors of improved business outcomes. Notably, microfinance plays a key moderating role by enhancing the impact of these literacies on performance, emphasizing its role beyond financial support toward capacity-building and knowledge empowerment. The results suggest that improving the literacy of microfinance managers and building partnerships with stakeholders, universities, and digital communities are crucial steps toward strengthening MSME resilience and competitiveness. This study contributes a novel empirical model from the perspective of micro-entrepreneurs, offering a foundation for future research that explores microfinance and MSME dynamics from both demand and supply perspectives to better support business sustainability in the digital economy.
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Uremadu, Sebastian O., and Edim N. Obim. "Effects of Deposit Mobilization on Financial Performance (Profitability) of Microfinance Banks in Nigeria." AKSU Journal of Administration and Corporate Governance 4, no. 1 (2024): 1–14. http://dx.doi.org/10.61090/aksujacog.2024.001.
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The study examined the effects of deposit mobilization on the financial performance of microfinance banks in Nigeria between 2012 and 2021. The study employed real interest rate and gross capital formation as control variables. This study utilized the exploratory research design and the population of the study consisted of all the microfinance banks in Cross River State and Abia State. A purposive/judgment sampling technique was used. Data for the study were obtained from the annual reports of various microfinance banks in the selected states in Nigeria. Regression models were estimated and analyzed using panel random-effects, and fixed effects. From the result of these analyses, the findings of the research were summarized as follows: there was a positive and significant effect of the demand deposit variable on the financial performance of microfinance banks in Nigeria; there was a negative and significant effect of savings deposit variable on the financial performance of microfinance banks in Nigeria. The study therefore recommended that Commercial banks, and Microfinance banks in particular, should intensify efforts on deposit mobilization as one of their main financing options in the Nigerian financial system, as the study has confirmed that microfinance banks largely depended on deposits for financing their operations. Besides, banks should implement effective strategies promoting prize-linked-savings such as to mobilize more deposits from both the formal and informal sectors of the economy. Both strategies would enhance their profitability rating in the Nigerian banking environment in the years ahead.
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Tessema, Banbul Shewakena. "The Paradox; the Shifting Goal of Microfinance from Social Performance to Financial Performance." International journal of Emerging Trends in Science and Technology 05, no. 04 (2017): 5122–27. http://dx.doi.org/10.18535/ijetst/v4i4.12.
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Abdul Rahim, Syarizal, Mahathir Muhamad, Nur Izzati Mohamad Anuar, Nik Malini Nik Mahdi, and Abd Aziz Mat Hassan. "Determinant Factors Influencing the Microfinance Repayment Performance among Borrowers of Amanah Ikhtiar Malaysia (AIM) in Jerantut, Pahang." Journal of Entrepreneurship and Business 7, no. 2 (2021): 21–29. http://dx.doi.org/10.17687/jeb.v7i2.458.
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Microfinance is one of the initiative sources of financial service for poor entrepreneurs that only have small businesses and lack access to banking and other services. Microfinance always focuses on poor people with no steady employment who cannot meet most of the qualifications to get financial services from normal banking. Thus, the abilities of borrowers to pay back their microfinance are one of the arguments that need concentration. The finding revealed that there were only two independent variables which were business experience and loan tenure which had a significant positive relationship with the dependent variable namely microfinance repayment performance among borrowers of Amanah Ikhtiar Malaysia (AIM) in Jerantut, Pahang. The knowledge of borrower was not significantly related to the microfinance repayment performance. The result provided the understanding and insight on AIM’s institution, financial institutions, and academic significance about how loan giving out and avoiding microfinance repayment defaults.
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Gadedjisso-Tossou, Akouvi, Curwitch P’ham Bodjona, Maman Tachiwou Aboudou, and Jean-Pierre Gueyie. "The Influence of CSR Practices on the Financial Performance of Microfinance Institutions in Togo." International Journal of Economics and Finance 13, no. 2 (2021): 52. http://dx.doi.org/10.5539/ijef.v13n2p52.
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Microfinance pursues a dual objective: reduce poverty (social performance) and ensure lasting profitability (financial performance). However, beyond these two performances, microfinance institutions (MFIs) have a social responsibility (CSR) towards their stakeholders. The main objective of this article is to measure the influence of the CSR practices of Togolese MFIs on their financial performance. The analysis is conducted over a sample of 60 Togolese MFIs, using the principal component analysis and generalized least squares techniques. The results show that CSR through the dimensions customer, employees and community positively and significantly impact on the financial performance of MFIs when measured by ROA, while the environment dimension has a negative significant influence.
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Mosoti, Jared, Joshua Wafula, and Andrew Nyangau. "Fraud risk management and financial performance of microfinance institutions in Kenya." International Journal of Research in Business and Social Science (2147- 4478) 12, no. 10 (2023): 257–62. http://dx.doi.org/10.20525/ijrbs.v12i10.3073.
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Fraud is a thorn in the flesh of many organizations in both local and global business ecosystems, more so in the financial sector because of the liquid nature of their services. To curb this menace, Financial Institutions including Microfinance institutions implemented fraud risk management practices. While larger financial institutions afford raft measures for curbing fraud, MFIs contend with less sophisticated practices in spite of them being the most susceptible to financial improprieties. Further, the determination of the overall effect of these practices on financial performance is critical in evaluating their success. The objective of this study therefore was to find out how fraud risk management practices affect the financial performance of Microfinance Institutions in Kenya. The study was anchored on the fraud management life cycle theory and focused on twelve deposit-taking Microfinance Institutions that were in operation in the Nairobi region of Kenya between 2016 to 2020. The study adopted a descriptive research design using cross-sectional data computed from the average financial results for five years 2016-2020. The study used purposive and stratified Random sampling methods to select a sample of 281 respondents from finance, ICT, operations, Audit, and Litigation managers and staff. The study used descriptive and inferential statistics to analyze the data. The results showed that fraud risk management positively and significantly affected financial performance by curbing incidents of fraud and concluded that to improve financial performance microfinance institutions should implement fraud risk management since they had a positive and significant effect on financial performance. The study recommended that firms should invest substantially in fraud risk management to reduce incidences of fraud and improve financial performance. Further, the management of Microfinance Institutions should continually evaluate and update their practices to keep abreast with the ever-changing fraud antics.
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Subagyo, Ahmad. "DIMENSIONS OF PERFORMANCE VALUE OF SHARIA MICRO FINANCE INSTITUTION." Misykat al-Anwar Jurnal Kajian Islam dan Masyarakat 5, no. 1 (2022): 157. http://dx.doi.org/10.24853/ma.5.1.157-172.
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ABSTRACTThe performance appraisal of financial institutions is generally measured by using financial ratio indicators. Sharia microfinance institutions are institutions that have been developed by both the Government and the society which have economic and social functions. Social functions that are grown from belief values will have a long-term impacts, both consistency and sustainability. Exploring social values based on Sharia principles is needed to make the operational basis for Islamic microfinance institutions more measurable, both in financial performance and social performance.There are three principles in evaluating the performance of Islamic microfinance institutions, namely (1) the principle of fairness, (2) the principle of honesty, and (3) the principle of partnership. These three principles are the basis for operationalizing LKMS, both in product development, services and corporate governance.Key words: Dimension, Sharia financial principle, Micro finance, fairness, honesty, partnership.