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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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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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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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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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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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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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Balkenhol, Bernd. "Microfinance: Performance and Efficiency." Finance & Bien Commun 28-29, no. 3 (2007): 147. http://dx.doi.org/10.3917/fbc.028.0147.
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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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Robert, Tayong Takwi. "The influence of digital products on the performance of microfinance institutions in Cameroon." World Journal of Advanced Research and Reviews 24, no. 3 (2024): 1789–804. https://doi.org/10.5281/zenodo.15201391.
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<strong>Purpose:</strong> This study was carried out to investigate the influence of digital products on the performance of microfinance institutions in Cameroon. Four digital products of microfinance institutions were involved in the analysis. These are digital payments, digital savings, digital credits and digital insurance. The performance of microfinance institutions included the financial performance and the social performance of the institutions. Specifically, the study investigated how digital payments, digital savings, digital credits and digital insurance influence the performance of microfinance institutions in Cameroon. <strong>Materials and Methods:</strong> The study adopted the survey research design and used primary data collected from 201 microfinance institutions in Cameroon through the administration of questionnaires. Data was analyzed using both descriptive and inferential statistics with the help of SPSS Version 20, STATA Version 14 and AMOS Version 23. <strong>Findings:</strong> The results of the study revealed that digital payments, digital savings and digital credits have significant positive influence on the performance of microfinance institutions in Cameroon while digital insurance has a negative influence on the performance of microfinance institutions in Cameroon, though this negative influence was found to be insignificant. <strong>Conclusion and Recommendations:</strong> The study concludes that digital products significantly influence the performance of microfinance institutions in Cameroon. To the microfinance institutions operating in Cameroon, the study recommends that more investment should be made on digital payments, digital savings and digital credits in order to improve the performance of the institutions.
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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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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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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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Babajide, Abiola Ayopo, Joseph Niyan Taiwo, and Kehinde Adekunle Adetiloye. "A comparative analysis of the practice and performance of microfinance institutions in Nigeria." International Journal of Social Economics 44, no. 11 (2017): 1522–38. http://dx.doi.org/10.1108/ijse-01-2016-0007.
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Purpose The successful story of microfinance institutions is often tied to the practice and methods of credit delivery as evidence among international world class microfinance institutions across the globe. The purpose of this paper is to examine the impact of practice and methods of credit delivery employed by “non- profit” and “for-profit” microfinance institutions on financial sustainability and outreach programmes of the microfinance institutions in Nigeria. Design/methodology/approach The study adopts the survey research design and multi-stage stratified random sampling procedure to collect data from 372 senior management staff, managing directors and board members of microfinance institutions of both groups in Nigeria. Data collected were analyzed using descriptive statistics and multiple regressions analysis. Findings The findings suggest that the current practice and methods of credit delivery of microfinance in both “non-profit” and “for-profit” microfinance institutions have an inverse relationship with the financial sustainability and outreach programmes of the institutions. This study provides empirical evidence for the incessant failure of microfinance institutions in Nigeria. Research limitations/implications The study therefore recommends an immediate overhaul of the methodology and practice of microfinance institutions in the country to align with international best practice. Originality/value In spite of the huge literature on microfinance in Nigeria, there is not enough evidence to empirically prove that the practice of microfinance has affected the performance of the industry in Nigeria. This study sets out to fill that gap in the literature. The paper examines the practice of microfinancing in Nigeria vis-à-vis the performance of the microfinance institutions, categorized into NGO and microfinance bank “for-profit” institutions using international best practices from countries where microfinance is highly successful as a benchmark for deployment of microfinance in Nigeria, in order to proffer policy direction to stakeholders on steps to take to ensure viability in the microfinance subsector in Nigeria.
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A.O, Ademola, Adegboyegun A.E, Kazeem B.L.O, and Akanbi T.A. "Reasons for low patronage of microfinance banks by women entrepreneurs in nigeria." Journal of Management and Science 10, no. 4 (2020): 1–6. http://dx.doi.org/10.26524/jms.10.5.
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That microfinance banks are established to improve the socio-economic conditions of women especially in rural areas is a well-known fact, however in recent times, women entrepreneurs in Nigeria are no longer patronizing Microfinance banks like before. This calls for a research into factors responsible for low patronage of Microfinance banks by women entrepreneurs in South West Nigeria. The study employed Average Gross Turnover, Factor Analysis, Goodman and Kruskal’s gamma statistics to evaluate the effect of Microfinance banks on performance of women entrepreneurs and to determine the reasons for low patronage of Microfinance banks by women entrepreneurs. The result showed that weak but positive relationship exist between Microfinance banks and performance of women entrepreneurs. It was also observed that harsh loan recovery methods, high interest rates, short repayment periods and high charges imposed on customers are major reasons for low patronage of Microfinance banks by women entrepreneurs in Nigeria. It is recommended that Microfinance banks should reduce their interest rates drastically and lengthen the repayment periods so as to encourage women to patronize them more and to improve their performances.
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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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Goel, Lakshmi, and Oliver Schnusenberg. "Introducing a Theoretical Model for the Performance of Microfinance Firms." International Journal of Applied Behavioral Economics 3, no. 3 (2014): 1–16. http://dx.doi.org/10.4018/ijabe.2014070101.
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Because borrowers sometimes take out additional loans in order to repay their earlier microfinance loans, microfinance loan repayment rates may be artificially inflated. The authors therefore propose a temporal socio-cultural model based on Hofstede's (1980) cultural dimensions, the diffusion of innovations, and the social network theory, that can be used to think about the performance of microfinance firms in general. The authors specifically apply this model to longitudinally assess the performance of SKS Microfinance, a microfinance firm in India. This approach adds a new dimension to understanding how to steer the industry away from some of the problems it has recently faced.
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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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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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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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Robert Tayong Takwi. "The influence of digital products on the performance of microfinance institutions in Cameroon." World Journal of Advanced Research and Reviews 24, no. 3 (2024): 1789–804. https://doi.org/10.30574/wjarr.2024.24.3.3875.
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Purpose: This study was carried out to investigate the influence of digital products on the performance of microfinance institutions in Cameroon. Four digital products of microfinance institutions were involved in the analysis. These are digital payments, digital savings, digital credits and digital insurance. The performance of microfinance institutions included the financial performance and the social performance of the institutions. Specifically, the study investigated how digital payments, digital savings, digital credits and digital insurance influence the performance of microfinance institutions in Cameroon. Materials and Methods: The study adopted the survey research design and used primary data collected from 201 microfinance institutions in Cameroon through the administration of questionnaires. Data was analyzed using both descriptive and inferential statistics with the help of SPSS Version 20, STATA Version 14 and AMOS Version 23. Findings: The results of the study revealed that digital payments, digital savings and digital credits have significant positive influence on the performance of microfinance institutions in Cameroon while digital insurance has a negative influence on the performance of microfinance institutions in Cameroon, though this negative influence was found to be insignificant. Conclusion and Recommendations: The study concludes that digital products significantly influence the performance of microfinance institutions in Cameroon. To the microfinance institutions operating in Cameroon, the study recommends that more investment should be made on digital payments, digital savings and digital credits in order to improve the performance of the institutions.
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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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Ahlin, Christian, Jocelyn Lin, and Michael Maio. "Where does microfinance flourish? Microfinance institution performance in macroeconomic context." Journal of Development Economics 95, no. 2 (2011): 105–20. http://dx.doi.org/10.1016/j.jdeveco.2010.04.004.
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Diaka, H.S, and E. L. Asenge. "Effect of Microfinance Banks on the Performance of Selected Women-Owned Enterprises in Makurdi Metropolis, Benue State, Nigeria." International Journal of Business Management and Technology 3, no. 1 (2023): 39–46. https://doi.org/10.5281/zenodo.7655591.
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This study examined the effect of microfinance banks on the performance of women-owned enterprises in Benue State, Nigeria. The study focused on women entrepreneurs who are clients of selected Microfinance Banks in Makurdi Metropolis, Benue State. The study specifically examined the effect of microfinance loan services, microfinance saving services and microfinance training services on the performance of women-owned enterprises in Benue State. A survey design was adopted for the study and questionnaire was used for data collection. The population consists of 68 owners of women-owned enterprises in Makurdi metropolis, Benue State. A census sampling method was adopted and the entire population was used for this study. Simple percentages, mean and standard deviation were used for data presentation and analysis while regression analysis was used for test of hypotheses. Findings of the study revealed that microfinance loan services, microfinance saving services and microfinance training services have significant effect on the performance of women-owned enterprises in Benue State. The study concludes that microfinance banks services significantly affect the performance of women-owned enterprises in Benue State. The study recommended amongst others that microfinance banks should always give loans to female entrepreneurs in Benue State with low interest rates in order to encourage them to expand their businesses and improve their standard of living.
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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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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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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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Illangakoon, Gishan. "Risk Management and Performance of Microfinance Industry." South Asian Journal of Social Studies and Economics 21, no. 3 (2024): 1–17. http://dx.doi.org/10.9734/sajsse/2024/v21i3779.
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Purpose: The purpose of this study was to understand the significance of the relationship between risk management and sustainability of the microfinance industry. Furthermore, how does effective risk management could be used towards sustainable growth in microfinance. The findings of the study revealed that there is a positive relationship between risk management and sustainability of microfinance industry.
 Design /Methodology/Approach: The study was conducted in three administrative districts in Sri Lanka, using 376 MF female borrowers, who represent from different businesses. The cluster sampling technique was selected for the survey. Primary data was collected using personally administered questionnaires and the sample frame was selected from two leading MFIs that consented to participate in the research. The conceptual frame work was developed based on the two variables risk management and sustainability of the microfinance industry. Simple liner regression analysis was taken to determine the significance of the relationship. 
 Findings: The study was able to find a positive relationship between effective risk management and industry sustainability. It was observed that that effective implementation of risk management process in the industry would certainly essential for long-term sustainability of microfinance institutions (MFIs). The findings showed that there were several strategic management measures that could have been put in place by key stakeholders in the industry.
 Research, Practical & Social Implications: The study found that although there has been potential growth in the industry vulnerability is very highly compared to other industries. Instead of the growth potential, MF is fighting for survival and sustainability. Mission drift, commercialization, and a lack of understanding among stakeholders, negatively impact the sustainability of the microfinance industry. It is significant to keep pace with the inculcating risk management culture among key stakeholders in the industry. Microfinance Institutes, Female Borrowers, Regulators. If not combined with the development of social capital, the financial programs have the possibility of creating a divided, dependent and unsustainable community.
 Implications/Originality/Value: To the best of the authors’ knowledge, no study has been conducted on uncovering and exploring the significance of the relationship of two key variables in microfinance industry. Most of the previous studies discussed these factors in isolation not as a collective wisdom to find a solution. This article is an industry contribution for inculcate risk management culture among stakeholders in microfinance and enhance different approaches to promote financial literacy levels of female borrowers who are key to sustainability in the industry.
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Daher, Lâma, and Erwan Le Saout. "Performance of Listed Microfinance Institutions." Strategic Change 26, no. 2 (2017): 145–58. http://dx.doi.org/10.1002/jsc.2117.
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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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Adamu, Garba. "Effect of Leadership Styles on Organizational Performance in Selected Microfinance Banks in Makurdi Metropolis, Benue State, Nigeria." International Journal of Management Sciences and Business Research 09, no. 10 (2020): 107–12. https://doi.org/10.5281/zenodo.4990636.
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<em>This study examined the effect of leadership styles on organizational performance in selected Microfinance Banks in Makurdi Metropolis, Benue State, Nigeria. The study utilized the survey research design using structured questionnaire to collate primary data from managers and employees of the selected Microfinance Banks in Makurdi Metropolis, Benue State Nigeria. The population is made up of fifty (50) respondents from the study area. Multistage sampling was used select the sector and the corresponding respondents for the study. The multiple linear regression analysis was used to examine the extent of the effect of leadership styles on the performance of the selected Microfinance in the study area. The results of the study indicates that democratic leadership style (DEMO) has a positive effect on performance of selected Microfinance Banks in Makurdi Metropolis, Benue State, Nigeria (PFMF) and the effect is statistically significant (p<0.05) and in line with a priori expectation. This implies that a unit increase in democratic leadership style (DEMO) will lead to a corresponding increase in performance of selected Microfinance Banks in the study area by a margin of forty (40) percent. Autocratic leadership style (AUTO) had a positive effect on performance of selected Microfinance Banks in Makurdi Metropolis, Benue State, Nigeria (PFMF) and the effect is statistically significant (p<0.05) and in line with a priori expectation. This means that a unit increases in Autocratic leadership style (AUTO) will lead to a corresponding increase in organizational performance by 39.0 percent. A negative effect exists between Laissez faire leadership style (LIAZ) has a negative effect on performance of selected Microfinance Banks in Makurdi Metropolis, Benue State, Nigeria (PFMF) and the effect is statistically significant (p<0.05) and not in line with a priori expectation. This means that a unit increases in Laissez-faire leadership style (LIAZ) will result to a corresponding decrease in performance of selected Microfinance Banks in Makurdi Metropolis, Benue State, Nigeria (PFMF) by a margin of 38.2 percent. It was concluded that the study concludes that democratic leadership style and a mix of autocratic leadership style in a short term are more appropriate in inducing the effectiveness of employees and thus improving the performance of Microfinance Banks in the study area. It was recommended among others that given the widely documented ineffectiveness of laissez-faire leadership styles and the results of this study, it is recommended that managers should discard this leadership style so as to improve organizational performance.</em>
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Zainuddin, Mohammad, Masnun Mahi, Shabiha Akter, and Ida Md Yasin. "The role of national culture in the relationship between microfinance outreach and sustainability: a correlated random effects approach." Cross Cultural & Strategic Management 27, no. 3 (2020): 447–72. http://dx.doi.org/10.1108/ccsm-12-2019-0219.
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PurposeThis study investigates the role of national culture between outreach and sustainability of microfinance institutions (MFIs). Despite microfinance's deep embeddedness in cultural contexts, research on the influence of national culture on MFI performance is rather sparse. This paper seeks to fill this gap and, based on cross-country microfinance data, attempts to explain the outreach-sustainability relationship in reference to cultural factors.Design/methodology/approachAn unbalanced panel, consisting of 5,741 MFI-year observations of 1,232 MFIs from 43 countries in six regions, is drawn from the Microfinance Information Exchange (MIX) Market database. Two different econometric models are tested. Model 1 estimates the direct effect of outreach on sustainability, using a fixed-effects estimator. Model 2 examines the moderation effect of national culture on outreach-sustainability relationship, employing correlated random effects approach.FindingsThe results show that depth of outreach and financial sustainability of MFIs are negatively related, and the relationship is moderated by national culture. Power distance and uncertainty avoidance positively moderate the outreach-sustainability relationship, whereas individualism and masculinity negatively moderate the relationship.Originality/valueThe findings suggest that the national culture where MFIs are located plays an important contingent role in their performance and that the magnitude of the trade-off effect varies from culture to culture. The research thus provides further insight in the trade-off debate and contributes to literatures of both microfinance and cross-cultural management.
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Al-Butrani, Duaa Mohammed, Azhar Ahmed AL.Hinai, and Essia Ries Ahemed. "The Effect of Capital Structure on the Performance of Microfinance Institutions in Oman." BOHR International Journal of Business Ethics and Corporate Governance 1, no. 1 (2022): 24–31. http://dx.doi.org/10.54646/bijbecg.003.
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The primary objective of this paper is to determine the relationship between the effects of capital structure and the performance of Microfinance Institutions in Oman. In this research, a questionnaire was used to obtain the results and the qualitative study where the qualitative data was collected through primary date. The target group to answer this questionnaire was from the owners of Microfinance in Oman, and 10 answers were obtained. The results found there is a positive relationship between Capital Structure and Performance of Microfinance. The capital structure is important in improving the performance of Microfinance and maintaining its proper management. It also leads to improved performance, which results in an increase in profit, the correct management of expenses, and a reduction in losses. Empirical results indicate that effective use and creation of social capital is vital to improving the effects of Microfinance, and Owners of Microfinance should focus more on harmonious social relationships and deliberately building social capital. Also, provided Microfinance Owners to work on a plan to reduce expenses and increase profitability, as well as recognize the correct management of capital structure. As well as understanding the structure of capital and the positive impact on the performance of Microfinance.
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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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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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Al-Butrani, Duaa Mohammed, Azhar Ahmed AL Hinai, and Essia Ries Ahemed. "Effect of capital structure on the performanceof microfinance institutions in Oman." BOHR International Journal of Business Ethics and Corporate Governance 1, no. 1 (2022): 23–29. http://dx.doi.org/10.54646/bijbecg.2022.03.
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The primary objective of this study is to determine the relationship between effect of capital structure and performance of microfinance institutions in Oman. In this research, a questionnaire was used to obtain the results and the qualitative study where the qualitative data were collected through primary date. The target group to answer this questionnaire was from the owners of microfinance in Oman, and 10 answers were obtained. The results showed that there is a positive relationship between capital structure and performance of microfinance. The capital structure is important in improving the performance of microfinance and maintaining its proper management. It also leads to improved performance, which results in an increase in profit, the correct management of expenses, and are duction in losses. Empirical results indicate that effective use and creation of social capital is vital to improving the effects of microfinance and that the owners of microfinance should focus more on harmonious social relationships and deliberately building social capital. In addition, the microfinance owners should work with a plan to reduce expenses and increase profitability, as well as recognize the correct management of capital structure. They should understand the structure of capital and the positive impact on the performance of microfinance.
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Barguellil, Achouak, and Leila Bettayeb. "The Impact of Microfinance on Economic Development: The Case of Tunisia." International Journal of Economics and Finance 12, no. 4 (2020): 43. http://dx.doi.org/10.5539/ijef.v12n4p43.
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This paper aims to study the impact of microfinance on economic development. We used data from the MIX Market (Microfinance Information Exchange), collected from &ldquo;Enda Tamweel&rdquo; microfinance institution over the period 1995-2017. The VAR estimation shows that microfinance has a negative and significant impact on the ratio of poverty per capita and the GINI index. Granger&#39;s causality test confirms that microfinance contributes more effectively to economic development through its social performance. On the other hand, financial performance gives priority to activities that contribute to the sustainable development of the microfinance institution.
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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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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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Joseph, Owino O., and Francis Kibera. "Organizational Culture and Performance: Evidence From Microfinance Institutions in Kenya." SAGE Open 9, no. 1 (2019): 215824401983593. http://dx.doi.org/10.1177/2158244019835934.
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The study aimed at determining the influence of organizational culture on the performance of microfinance institutions in Kenya. A descriptive cross-sectional survey design was adopted. Secondary data were collected from annual reports by the Association of Microfinance Institutions in Kenya and the Microfinance Rating Africa. Primary data were collected using structured questionnaire targeting the chief executive officer, human resource manager, and marketing manager. Data were analyzed using factor analysis and hierarchical regression. Our analysis identifies clan and hierarchy as the dominant cultural typologies in the microfinance industry. The results obtained demonstrate that organizational culture has a significant influence on non market performance. In addition, market culture is inversely associated with debt/equity ratio. We conclude that organizational culture is a major source of sustainable competitive advantage in the microfinance industry. Furthermore, we conclude that market culture promotes financial independence and sustainability in the long term.
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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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Hawariyuni, Weni, and Salina Hj. Kassim. "Proposing an Integrated Islamic Microfinance Model in Alleviating Poverty and Improving the Performance of Microenterprises in Indonesia." Journal of Accounting Research, Organization and Economics 2, no. 2 (2019): 135–54. http://dx.doi.org/10.24815/jaroe.v2i2.14630.
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Objective – This study proposes an integrated Islamic microfinance model in alleviating poverty and improving the performance of microenterprises based on a case study of Indonesia, by focusing specifically on BRI Microbanking. Design/methodology – This study adopts the exploratory study to construct the integrated Islamic microfinance with the purpose to alleviate poverty and enhance the business performance of enterprises. Results – As Islamic microfinance is known widely due to the high demand from Muslim countries. Since, it plays a crucial role effectively in alleviating poverty and developing the business performance on enterprises, particularly on microenterprises. Presently, many scholars attempted to build a successful Islamic microfinance model by using Islamic financing instruments such as mudarabah, musyarakah, and murabahah. This study attempts to build an integrated Islamic microfinance model by using BRI Syariah Micro as a case study. It is expected that this integrated Islamic microfinance model can enrich existing models in terms of social and economic aspects. Originality/Value – This research concentrates on proposing an integrated Islamic microfinance model based on the case study of BRI Syariah Microbanking. There seems to be a gap in the literature on the actual implementation of integrated Islamic microfinance in the world. The study highlights major factors to be emphasized to ensure the effectiveness of proposing an integrated Islamic microfinance model for BRI Syariah micro banking to alleviate poverty and to improve the performance of microenterprises.
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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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Dhungana, Bharat Ram, and Ramkrishna Chapagain. "Performance of Multiple Borrowing Clients in Gandaki Province of Nepal." Prithvi Academic Journal 2 (May 1, 2019): 18–31. http://dx.doi.org/10.3126/paj.v2i0.31503.
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The multiple borrowing problems are more common in microfinance institutions in Nepal. The study aims to evaluate the performance of multiple borrowing clients in Gandaki province of Nepal with reference to Muktinath Bikas Bank Limited (MBBL). The performance of multiple borrowing clients, in terms of women empowerment, consumption expenditure, capital expenditure, micro-enterprises creation, saving, investment, and profit, has been examined with the help of descriptive and inferential statistics. The study has been confined to five districts of Gandaki province and the data have been collected from MBBL clients who are involved in microfinance intervention at least from the last five or more years. The performance of most of the observed clients was empowered by microfinance activities but no significant difference in terms of changes in the livelihood parameters. Although microfinance programmes empower clients, the results of the investment, saving, micro-enterprises creation, capital and consumption expenditure, and income generation of clients are not convincing. The regulatory authority should identify the problems of multiple borrowing whether the financing from microfinance institutions is just for their profit or for productive application of loan. The socio-economic performance of clients is connected with the effective monitoring of clients made by microfinance institutions whether the loan has been properly utilized or not.
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Vanni, Kartika Marella, and Riska Wijayanti. "Comparative Study of Development and Performance Evaluation Sharia Microfinance Institutions in Indonesia." AL-ARBAH: Journal of Islamic Finance and Banking 2, no. 2 (2020): 119–38. http://dx.doi.org/10.21580/al-arbah.2020.2.2.7229.
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Purpose - This paper aims to determine the role of Islamic Microfinance Institutions (LKMS) in Indonesia and to make comparisons between theory and practice in the field.Method - The method used is a descriptive qualitative approach in which data collection is taken from a study of various literature and then compared with previous studies related to the discussion.Result - Sharia Microfinance Institutions theoretically play a role to help improve the national economy and alleviate community poverty by embracing the lower class and all remote areas. Meanwhile, empirically, Islamic Microfinance Institutions have tried to carry out their operational activities in accordance with the provisions and principles of Sharia, but there are still internal and external constraints.Implication - This study examines Islamic Microfinance Institutions in Indonesia.Originality - There are differences between theory and practice in Islamic Microfinance Institutions in Indonesia.
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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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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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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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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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Shettima, Usman, and Nazam Dzolkarnaini. "Board characteristics and microfinance institutions’ performance." Journal of Accounting in Emerging Economies 8, no. 3 (2018): 369–86. http://dx.doi.org/10.1108/jaee-01-2017-0006.
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Purpose The purpose of this paper is to examine the effect of board characteristics on MFIs performance in Nigeria. A specific country study is warranted given the results from pooled cross-country studies may be biased owing to a failure to control for country differences. It is also particularly challenging to generalize the outcome of these results into a specific country given that many factors about MFIs, ranging from the nature of governance, legal status, size and prudential regulations, are not similar across countries. Design/methodology/approach The relationship between board characteristics and microfinance banks performance in Nigeria is tested using a sample of 120 firm-year observations covering 30 MFIs in the periods from 2010 to 2013. The study extracted all microfinance-level data from the Microfinance Information Exchange database. Findings The authors document a positive and significant relationship between board size and MFIs performance. The authors also find negative relation between female directors and MFIs performance, but not significant. The results suggest that larger board size indicates good corporate governance practice, which leads to reduced agency cost. Research limitations/implications This study sheds new lights on the Nigerian MFIs’ board room dynamic. As the government is increasingly contemplating on the board structure and corporate governance policies, the study offers useful and timely empirical guidance to the Nigerian regulators. Originality/value Given the important role of microfinance industry in Nigeria, this is the first study of its kind analyzing the impact of board characteristics on microfinance performance among Nigerian MFIs.
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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.