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Davis, Rebecca, Elvis K. Donkoh, Bernard Mawah, and Blessed Amonoo. "Internal Financial Risk Management In Microfinance Companies: A Case Study Of Akuapem Rural Bank, Ghana." International Journal of Statistics and Probability 7, no. 5 (August 9, 2018): 64. http://dx.doi.org/10.5539/ijsp.v7n5p64.
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The operations of Microfinance Institutions (MFIs) in Ghana have recently come under serious public scrutiny. This position was fairly caused by Bank of Ghana’s (BOG’s) announcement regarding 70 microfinance companies whose provisional licenses were revoked BOG (2016). This led to the closure of DKM Diamond Microfinance and some other microfinance companies in the country. This worsening circumstance surrounding the microfinance industry calls for the need to provide practical knowledge on the use of financial analysis tools to manage internal financial risks of the microfinance industry. Data from Akuapem Rural Bank (AKRB) financial statements for the period of 2008 to 2015 (refer to appendix) was analysed using regression analysis, descriptive statistics, trend analysis and ratios. It was observed that the profitability of AKRB is greatly influenced by credit risks, bank size, interest income growth and debt-ratio. The study also revealed that AKRB had comprehensive and adequate risk management structures in place in managing its credit and other operational risks.
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Liu, Junxiang. "Microfinance Risk Management with Work Breakdown Structure." Journal of Financial Risk Management 01, no. 03 (2012): 38–41. http://dx.doi.org/10.4236/jfrm.2012.13007.
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Kalu, Emenike O., Bashabe Shieler, and Christian U. Amu. "Credit Risk Management and Financial Performance of Microfinance Institutions in Kampala, Uganda." Independent Journal of Management & Production 9, no. 1 (March 2, 2018): 153. http://dx.doi.org/10.14807/ijmp.v9i1.658.
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The objective of this study was to evaluate whether relationship exist between credit risk management techniques and financial performance of microfinance institutions in Kampala, Uganda. Specifically, the study examined whether there is a relationship between credit risk identification, credit risk appraisal, credit risk monitoring, credit risk mitigation and financial performance of microfinance institutions in Kampala using sample of 60 members of staff in finance and credit departments of three licensed microfinance institutions in Kampala, Uganda namely Finca Uganda Ltd, Pride Microfinance Ltd, UGAFODE Microfinance Ltd. Primary data was collected using questionnaires and it comprised of closed ended questions. Secondary data was collected from the microfinance institutions (MDI’s) annual reports (2011 - 2015). Frequencies and descriptive statistics were used to analyse the population. Pearson linear correlation coefficient was adopted to examine relationship between credit risk management techniques and financial performance. The findings indicate that credit risk identification and credit risk appraisal has a strong positive relationship on financial performance of MDIs, while credit risk monitoring and credit risk mitigation have moderate significant positive relationship on financial performance of MDIs. The study recommends, among others, that the credit risk appraisal process should identify and analyse all loss exposures, and measure such loss exposures. This should guide in selection of technique or combination of techniques to handle each exposure. The study concludes that MDIs should continually emphasise effective credit risk identification, credit risk appraisal, credit risk monitoring, and credit risk mitigation techniques to enhance maximum financial performance.
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Rozzani, Nabilah, Intan Salwani Mohamed, and Sharifah Norzehan Syed Yusuf. "Risk management process: Profiling of islamic microfinance providers." Research in International Business and Finance 41 (October 2017): 20–27. http://dx.doi.org/10.1016/j.ribaf.2017.04.009.
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Ukanwa, Irene, Lin Xiong, and Alistair Anderson. "Experiencing microfinance." Journal of Small Business and Enterprise Development 25, no. 3 (June 18, 2018): 428–46. http://dx.doi.org/10.1108/jsbed-02-2017-0043.
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Purpose The purpose of this paper is to address the problem of why the poorest, most disadvantaged groups such as rural African women, benefit less from microfinance. The authors focus on the perception and experiences of ordinary rural entrepreneurial women on microfinance in a context of extreme poverty and where family responsibility and economic activities are closely intertwined. Design/methodology/approach The authors purposefully sampled 15 poor females with small businesses in two Nigerian villages. The key characteristic guiding the sampling was that the respondents had to be poor. The authors held two focus groups and ten interviews to capture their experience and understanding of microfinance. The authors used thematic analysis to establish patterns in the data. Findings For poor entrepreneurial women, a livelihood for survival, putting food on the table and paying school fees are priorities, not business growth. They see microcredit as debt and a great risk that could lead to irreversible losses. Family responsibilities for basic consumption needs of the household can affect their ability to repay loans; perceived dangers of microcredit may outweigh potential benefits. Research limitations/implications The theories, especially functionalist economic theory, do not take account of microfinance users’ experiences. Practical implications Microfinance should be aware that the poorest perceive microcredit differently and should eliminate the intimidating barriers raised to them. Instead of providing a means for the poor to alleviate poverty or coping strategies for them to manage cash flows and risks, microfinance causes fear and anxiety by demanding high rate of return in a very short period of time. Social implications The very poorest, who should be the beneficiaries of microfinance, are less likely to be able to benefit. The condition of poverty creates different realities for those at the base of the pyramid. Originality/value This research questions the neoliberal rationality assumptions that microfinance rest on; the paper fills a gap in the literature, i.e. how the potential borrowers themselves living in deep-rooted poverty perceive and experience microfinance.
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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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Oyetayo, O. J., and S. U. Eboigbe. "Analysis of Financial Risk Management Strategies of Microfinance Banks." Journal of Financial Risk Management 07, no. 03 (2018): 223–40. http://dx.doi.org/10.4236/jfrm.2018.73015.
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Venuti, Marco. "Editorial: Getting into risk management and financial sustainability issues." Risk Governance and Control: Financial Markets and Institutions 8, no. 4 (2019): 4–5. http://dx.doi.org/10.22495/rgcv8i4editorial.
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The forth issue of the journal provides contributions to the exploration of subjects related to different research areas: public and private sectors, merger and acquisition, insurance activity and sustainability. In particular, the issues dealt with concern: economic risk, operational risk, performance administration satisfaction, efficacy public sector organizations, mergers, financial statements, reinsurance, insurers, solvency, profitability, taxes, financial sustainability and microfinance
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Al-Azzam, Moh’d, and Karim Mimouni. "Is exchange rate risk priced in microfinance?" Research in International Business and Finance 36 (January 2016): 520–31. http://dx.doi.org/10.1016/j.ribaf.2015.10.009.
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Bennouna, Ghita, and Mohamed Tkiouat. "Scoring in microfinance: credit risk management tool –Case of Morocco-." Procedia Computer Science 148 (2019): 522–31. http://dx.doi.org/10.1016/j.procs.2019.01.025.
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Janda, Karel, and Barbora Svárovská. "INVESTING INTO MICROFINANCE." Journal of Business Economics and Management 11, no. 3 (September 30, 2010): 483–510. http://dx.doi.org/10.3846/jbem.2010.24.
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This paper investigates investment performance of microfinance investment funds. The examined funds have recorded lower total risk than global stocks and bonds (measured by four benchmark indices) with moderate but stable returns. The analysis revealed that investment in microfinance investment funds that focus especially on debt instruments represents an attractive opportunity for the portfolio diversification as this asset class does not show any positive correlation with global or emerging capital markets. At the same time, it provides adequate risk-adjusted returns and may be therefore attractive not only for investors with a particular interest in the socially responsible aspect of investment into microfinance. Santrauka Šiame straipsnyje nagrinejamos investicijos i investicinius mikrofinansu fondus. Nagrinejami fondai yra žemesnes bendrosios rizikos nei pasaulio akcijos ir obligacijos (apskaičiuotos pagal keturis atskaitos rodiklius) su vidutiniška, bet stabilia graža. Analize parode, kad investavimas i investicinius mikrofinansu fondus, ypač i susijusius su isiskolinimo priemonemis, yra patraukli galimybe verslo portfolio diversifikacijai, nes ši turto kategorija nerodo jokios teigiamos koreliacijos su pasaulio ar naujomis kapitalo rinkomis. Tuo pačiu metu tai teikia adekvačia graža pagal rizika ir todel gali būti patrauklūs ne tik investuotojams, turintiems tam tikru interesu.
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Alaoui, Youssef Lamrani, and Mohamed Tkiouat. "Managing Operational Risk Related to Microfinance Lending Process using Fuzzy Inference System based on the FMEA Method: Moroccan Case Study." Scientific Annals of Economics and Business 64, no. 4 (December 1, 2017): 459–71. http://dx.doi.org/10.1515/saeb-2017-0029.
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Abstract Managing operational risk efficiently is a critical factor of microfinance institutions (MFIs) to get a financial and social return. The purpose of this paper is to identify, assess and prioritize the root causes of failure within the microfinance lending process (MLP) especially in Moroccan microfinance institutions. Considering the limitation of traditional failure mode and effect analysis (FMEA) method in assessing and classifying risks, the methodology adopted in this study focuses on developing a fuzzy logic inference system (FLIS) based on (FMEA). This approach can take into account the subjectivity of risk indicators and the insufficiency of statistical data. The results show that the Moroccan MFIs need to focus more on customer relationship management and give more importance to their staff training, to clients screening as well as to their business analysis.
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Njuguna, Dr James Rurigi, Prof Roselyn Gakure, Dr Anthony Gichuhi Waititu, and Dr Paul Katuse. "FINANCIAL RISK MANAGEMENT STRATEGIES AND THE GROWTH OF MICROFINANCE SECTOR IN KENYA." Journal of Accounting 2, no. 1 (March 1, 2017): 23–53. http://dx.doi.org/10.47941/jacc.118.
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Purpose: The purpose of this study was to investigate how financial risk management strategies lead to growth of MFI sector in Kenya.Methodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: The findings indicated that MFIs had effective financial risk management strategies such as effective credit risk management practices, liquidity risk management practices, interest risk management practices and price risk management practices. In particular, MFIs took into consideration the conditions, characters, capacity, collateral and capital of borrowers. Strict debt collection practices were widely adopted by MFIs. In addition, the concept of Know Your Customer (KYC) policy, seem to have been adopted by MFIs. The relationship between financial risk management strategies and growth was positive and significant. It also shown that sources of funds for MFIs include external sources and internal sources and the most frequently used source of funds are bank loans. The use of banks loans may present various risk exposures to MFIs, the most significant being interest rate risk. However, the ability of MFIs to source funds from various sources indicates that MFIs can apply the pecking order by first exploiting internal sources of funds since they present a lower financial risks and then move on to external sources. However, despite the financial risk exposure accompanied by leverage from external sources, MFIs may also benefit as they may experience higher growth driven by the leverage. It was also found that MFIs had put in place a number of good practices that had emerged to promote responsible and inclusive lending. These include loan size limits, standardized (simple) loan terms, zero tolerance on delinquency, group-based lending. This finding implies that MFIs have put in place effective credit risk management policies which are part of an overall financial risk management strategy. The existence of effective financial risk management practices may have influenced the growth of MFIsUnique contribution to theory, practice and policy: The study recommends that the MFIs to continue practicing effective financial management practices as this would improve the growth of MFIs.
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Li, Jie, and Zhenyu Sheng. "Measuring and Managing Credit Risk for Chinese Microfinance Institutions." International Journal of Economics and Finance 10, no. 7 (June 10, 2018): 56. http://dx.doi.org/10.5539/ijef.v10n7p56.
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Chinese microfinance institutions need to measure and manage credit risk in a quantitative way in order to improve competitiveness. To establish a credit scoring model (CSM) with sound predictive power, they should examine various models carefully, identify variables, assign values to variables and reduce variable dimensions in an appropriate way. Microfinance institutions could employ both CSM and loan officer’s subjective appraisals to improve risk management level gradually. The paper sets up a CSM based on the data of a microfinance company running from October 2009 to June 2014 in Jiangsu province. As for establishing the model, the paper uses Linear Discriminant Analysis (LDA) method, selects 16 initial variables, employs direct method to assign variables and adopts all the variables into the model. Ten samples are constructed by randomly selecting records. Based on the samples, the coefficients are determined and the final none-standardized discriminant function is established. It is found that Bank credit, Education, Old client and Rate variables have the greatest impact on the discriminant effect. Compared with the same international models, this model’s classification effect is fine. The paper displays the key technical points to build a credit scoring model based on a practical application, which provides help and references for Chinese microfinance institutions to measure and manage credit risk quantitatively.
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Astawa, I. Putu, I. Made Sudana, and NGN Suci Murni. "Non-Financial Performance Measures on Local Culture Basis in Assessing The Health of Microfinance Institutions." Journal of Finance and Banking Review Vol. 2 (3) Jul-Sep 2017 2, no. 3 (June 17, 2017): 29–35. http://dx.doi.org/10.35609/jfbr.2017.2.3(5).
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Objective - Health assessment on microfinance institutions was conducted through non-financial measurements consisted of assessment on general and risk managements. The assessment was commonly used to assess commercial banks. Microfinance institutions, however, are differed to commercial bank in terms of their closeness to the poor. The paper presented the development and analysis of non-financial performance measures using local culture basis that can be applied to properly assess microfinance institutions. Methodology/Technique - Qualitative study with ethnomethodology approach was applied to see cultural activities undertaken. Managers were considered as key informants. Results of qualitative study were analyzed using Fuzzy-Analytic Hierarchy Process method and Weighted Product Model was applied to weight the criteria and sub-criteria as well as the final assessment. Findings - Results showed that local culture activities that could be used to assess general management in microfinance institutions were providing assistance in establishing places of worship, supporting religious activities, supporting the development of facilities and infrastructures in the villages, relief activities of cultural festival, helping in funeral, wedding favors, educational assistance, medical assistance, forming arts groups, and business group. Novelty - This study suggests that non-financial performance measurements can use local culture and facilitate the management of microfinance institutions to perform performance measurement Type of Paper - Empirical Keywords: Non-Financial; Performance Measures; Local Culture; Microfinance Institutions. JEL Classification: G21, G31.
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Njuguna, Dr James Rurigi, Prof Roselyn Gakure, Dr Anthony Gichuhi Waititu, and Dr Paul Katuse. "OPERATIONAL RISK MANAGEMENT STRATEGIES AND THE GROWTH OF MICROFINANCE SECTOR IN KENYA." Journal of Business and Strategic Management 2, no. 2 (March 1, 2017): 42. http://dx.doi.org/10.47941/jbsm.120.
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Purpose: The purpose of this study was to establish how operational risk management strategies lead to growth of MFI sector in Kenya.Methodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: Findings revealed that the MFI had adequate policies and procedures to manage its operational risks and the MFI had an operations manual. The findings also indicated that the MFIs have adhered to written policies and procedures to manage operational risks in the financial operations area, procurement area, treasury area, and financial management area. Results further indicated that the MFI had effective internal control systems for detecting fraud or other significant operational risks. Finally the study findings indicated that MFI’s internal audit functions ensured effective use of resources, accurate financial reporting, and ample random spot checks of MFI branches, clients, and staff. The regression results indicated that there was a positive relationship between operational risk management strategies and MFI growth.Unique contribution to theory, practice and policy: The study recommends that the MFIs to continue practicing effective operational risk management practices such as internal control framework comprising of policies and procedures. MFIs need to uphold the existence and accessibility of operational manuals. It is suggested that adherence to written policies and procedures is positive strategy and it should be emphasized. The internal audit functions for effective use of resources and accurate financial reporting needs to be emphasized as it had a positive effect on growth. The MFIs should also benchmark their technology with that of banks to reduce human error, to produce timely and relevant data. It is recommended that implementation of know your client (KYC) requirements should be enhanced as it has an effect on growth.
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Chakabva, Oscar, and Thomas Thurner. "Credit risk management practices in small and medium-sized micro-finance providers." Corporate Ownership and Control 13, no. 1 (2015): 1101–7. http://dx.doi.org/10.22495/cocv13i1c9p11.
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Microfinance providers play a significant role in emerging economies by providing banking-related financial services to the low income market. However, lending to the low income market is associated with high credit risk. This paper investigates the use of certain risk management practices by small and medium-sized micro finance providers in the Cape Metropolitan Area. The big difference of micro-finance is that collaterals are absent and instead, a close connection between microfinance providers and their clients come into place. And while micro-finance providers use follow up calls and penalties to avoid losses from loan overdue, the classical way to the court is not really an option. Instead, community leaders function as middlemen between the provider and the customer. Although most respondents agree that policies are in place, written risk policies exist in only half of our respondent’s enterprises. We further showed that the views on risk management depend on whether the respondent is an owner or a manager of the venture.
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Ullah, Inayat, and Madiha Khan. "Microfinance as a tool for developing resilience in vulnerable communities." Journal of Enterprising Communities: People and Places in the Global Economy 11, no. 2 (May 8, 2017): 237–57. http://dx.doi.org/10.1108/jec-06-2015-0033.
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Purpose The purpose of this paper is to review different microfinance products and services that can be offered to reduce the financial vulnerabilities of communities at risk. Following a detail literature review, the effectiveness of different forms of microfinance services in creating resilience in the affected communities was analysed and whether they can be applied to mitigate the risk of future disasters was assessed. In addition, the study was conducted to assess whether microcredit can help reduce direct risk exposure of the poor through income smoothing. Design/methodology/approach This study is based on a review of existing theories. Findings The notion that most vulnerable communities are financially weak is evident from studies. This study finds that microcredit can help reduce direct risk exposure of poor through income smoothing, while saving can help them recover from the losses of disasters. Our review also suggests that there is no specific model of microfinance services which can have a holistic impact on the financial capacity-building, particularly during the rehabilitation process. Research limitations/implications There are different categories of microfinance products with distinct characteristics and associated benefits to the communities. Some of the major microfinance products as identified in this study are, saving products, credit products and insurance products. These products have multidimensional benefits, as there are many approaches adopted by microfinance institutions (MFIs) and clients regarding the use of these products. However this study focuses on the use of these products towards resilience development in the community. Other applications of these products still need to be explored. Practical implications There is a need for a comprehensive financial tool that can be effectively applied to expedite the process of rehabilitation and reduce the financial impact of disasters on the community, particularly the poor. Major issues in the context of disasters faced by MFIs to design their products in the affected areas are also highlighted in the study. Social implications The study throws lights on different microfinancial tools such as microloans, microcredits and cash for work, etc. offered by banks and other organizations and highlights their role in the rehabilitation and reconstruction of those affected by disasters in different parts of the world. Originality/value This paper contributes to the discourse of microfinance and its social applications in developing countries. It provides original role of microfinance as a tool for creating community resilience to the impacts of disasters.
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Tehulu, Tilahun Aemiro. "Determinant Factors in Credit Risk Management of Microfinance Institutions in Ethiopia." Journal of Policy and Development Studies 10, no. 3 (2016): 118–29. http://dx.doi.org/10.12816/0032103.
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Schreiner, Mark. "Statistical audit sampling for portfolio‐at‐risk in microfinance." Managerial Finance 35, no. 12 (October 16, 2009): 990–98. http://dx.doi.org/10.1108/03074350911000043.
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Shaik Mohammed, Wasiullah, and Khalid Waheed. "Interest-free microfinance in India." Journal of Islamic Accounting and Business Research 10, no. 5 (October 14, 2019): 695–709. http://dx.doi.org/10.1108/jiabr-11-2017-0176.
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Purpose The purpose of this study is to understand the operations of interest-free microfinance institutions, find the issues and recommend possible solutions in the Indian context. Design/methodology/approach This paper is based on the case study of Sanghamam Multistate Cooperative Credit Society. This research uses both primary and secondary data. The institution is assessed in terms of two major performance aspects, namely, outreach indicators and financial performance indicators. A brief comparative study of Sanghamam with the aggregate performance of the Indian microfinance industry has also been included. Findings It is found that Sanghamam has been successfully providing interest-free microfinance services in India. The performance of Sanghamam on selected industry benchmarks is in line with the performance of the Indian microfinance industry. However, a few issues such as potential liquidity risk, lower penetration in the poorer sections of the population, Shariah issues in the method of determination of service charges on demand loans and in the structure of group deposit scheme and profit-sharing business loans have been highlighted. Research limitations/implications Sanghamam is evaluated from only outreach and financial performance aspects and not from the aspect of the impacts of its services. Practical implications This study would help in documenting the operations of Sanghamam. Moreover, the recommendations provided, if implemented, would help Sanghamam in further growth. Social implications This study would help create awareness in the society about the practices of interest-free microfinance. Originality/value This paper highlights the interest-free microfinance practices in India that have not received the needed attention. The authors have discussed the key issues related to the interest free microfinance and recommended the possible solutions.
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Lassoued, Naima. "What drives credit risk of microfinance institutions? International evidence." International Journal of Managerial Finance 13, no. 5 (October 9, 2017): 541–59. http://dx.doi.org/10.1108/ijmf-03-2017-0042.
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Purpose The purpose of this paper is to shed light on the factors that affect microfinance institutions’ (MFI) credit risk. These factors include MFIs’ characteristics and country-level indicators. Design/methodology/approach This empirical study uses an unbalanced panel data of 638 MFIs from 87 countries observed over a period ranging from 2005 to 2015. Random-effects models are used to estimate the models. Findings The results reveal that group-lending methodology, percent of loan granted to women and diversification activities reduce credit risk; credit quality is enhanced by the relevance of the information published by public or private bureaus and law enforcement cost increases credit risk. Finally, credit risk tends to be limited in a good institutional environment. Practical implications Several implications can be drawn in light of these findings. For MFIs’ managers, using group lending or granting more credit to women and diversifying their activities enhance their credit quality. Furthermore, authorities need to strength debt repayment institutions and reinforce institutional environment to help MFIs to limit their credit risk. Originality/value Previous studies focus on specific MFIs’ practices that enhance repayment rate or on country-level indicators. One of the contributions of this paper is the use of both types of indicators.
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Skees, Jerry R., and Barry J. Barnett. "Enhancing microfinance using index‐based risk‐transfer products." Agricultural Finance Review 66, no. 2 (November 2006): 235–50. http://dx.doi.org/10.1108/00214660680001189.
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Njuguna, Dr James Rurigi, Prof Roselyn Gakure, Dr Anthony Gichuhi Waititu, and Dr Paul Katuse. "STRATEGIC RISK MANAGEMENT STRATEGIES AND THE GROWTH OF MICROFINANCE SECTOR IN KENYA." Journal of Business and Strategic Management 2, no. 2 (March 1, 2017): 17. http://dx.doi.org/10.47941/jbsm.119.
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Purpose: The purpose of this study was to establish how strategic risk management strategies contribute to growth of MFI sector in KenyaMethodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: The findings indicated that there were several strategic management measures that had been put in place by MFI to promote growth. These included the existence of a board with the skills and ability to lead the MFI strategically. In addition, the board members roles extended beyond governance and into management of the MFI and the board had policies stipulating term limits and rotation for its members. Results further indicated that the board had adequate independent directors who agreed on the MFIs mission and strategic direction. The results revealed that the MFI had guidelines for preventing conflicts of interest among board members and the MFI guidelines prohibited related-party (insider) lending, required full disclosure of all conflicts of interest, and required arm’s length business transactions. Findings further indicated that the MFI’s organizational structure ensured staff accountability and enhanced MFI’s efficiency and productivity. Overall, regression results indicated that there was a positive relationship between strategic risk management strategies and MFI growth.Unique contribution to theory, practice and policy: Following the study results, it was recommended that the MFIs need to enhance effectiveness of strategic risk management practices such as adherence to best practices on corporate governance. In addition, the MFIs need to enhance the skills of the board members as doing so would improve the level of strategic risk management practice. The study recommended that those MFIs that had not implemented the guidelines for preventing conflicts of interest among board members are advised to do so as this may have an impact on the level of growth. It is recommended that MFIs need to put in place guidelines prohibiting related party (insider trading) and also require full disclosure of all conflicts of interest as doing so would improve the growth of the MFI. Furthermore, MFIs need to increase the number of independent directors in their boards as doing so would improve the growth of the MFIs.
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Njuguna, Dr James Rurigi, Prof Roselyn Gakure, Dr Anthony Gichuhi Waititu, and Dr Paul Katuse. "REGULATORY RISK MANAGEMENT STRATEGIES AND THE GROWTH OF MICROFINANCE SECTOR IN KENYA." International Journal of Finance 2, no. 4 (February 28, 2017): 76. http://dx.doi.org/10.47941/ijf.117.
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Purpose: The purpose of this study was to determine how the regulatory risk management strategies contribute to growth of MFI sector in KenyaMethodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: The study findings indicated that the MFI were compliant with all relevant regulations and that the regulatory environment provided an appropriate framework for the MFIs current and potential operations and legal status. The findings further indicated that the supervisory agency (CBK) provided adequate supervision of the MFI and the MFI has not in the past incurred heavy fines for violating regulations. Furthermore, the study findings indicated that the MFI has no cases pending in court over breach of contract. The regression results indicated that there was a positive effect on MFI growthUnique contribution to theory, practice and policy: it is recommended that the MFIs should continue practicing effective regulatory risk management practices such as development of appropriate regulatory framework for current and potential operations and legal status. This would significantly improve the growth of the MFI. The study also recommends that embracing supervision by the supervisory agency- CBK and honoring of contracts to avoid court cases and fines were good practices. It is recommended that compliance with all relevant regulations is crucial as it enhances the growth of MFIs. Study findings recommended that putting measures to prevent collection of illegal deposits and establishing a good working relationship with the regulatory authorities, will improve the growth of MFIs. The study recommends that encouraging open communication with regulators and provision of an opportunity to defuse any potential problems may be a crucial regulatory strategy as it improves the growth of MFIs
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Manan, Siti Khadijah Ab, and Muhammad Hakimi Bin Mohd Shafiai. "Risk Management of Islamic Microfinance (IMF) Product by Financial Institutions in Malaysia." Procedia Economics and Finance 31 (2015): 83–90. http://dx.doi.org/10.1016/s2212-5671(15)01134-x.
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Tchakoute-Tchuigoua, Hubert. "Active risk management and loan contract terms: Evidence from rated microfinance institutions." Quarterly Review of Economics and Finance 52, no. 4 (November 2012): 427–37. http://dx.doi.org/10.1016/j.qref.2012.08.001.
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Shieler, Bashabe, Kalu O. Emenike, and Christian U. Amu. "Credit Risk Management and Financial Performance of Microfinance Institutions in Kampala, Uganda." Journal of Banking and Financial Dynamics 1, no. 1 (2017): 29–35. http://dx.doi.org/10.20448/journal.525.2017.11.29.35.
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Visconti, Roberto Moro. "Global recession and microfinance risk governance in developing countries." Risk Governance and Control: Financial Markets and Institutions 1, no. 3 (2011): 17–30. http://dx.doi.org/10.22495/rgcv1i3art2.
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Global recession, started in 2008, is still proving an unresolved perfect storm and the financial crisis has affected also the real economy, creating widespread social unrest. Microfinance institutions (MFIs) in developing countries seem however less affected by the worldwide turmoil, due to their segmentation and resilience to external shocks. Recession has a big impact on governance mechanisms, altering the equilibriums among different stakeholders and increasing the risk of investment returns; any governance improvement is highly welcome and recommended. No governance, no money for growth or bare survival. In the confused phase we are living in, at the moment there are not evident winners, but the underbanked poorest, unless properly supported, once again risk being the ultimate losers.
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Bennouna, Ghita, and Mohamed Tkiouat. "Stochastic model of microcredit interest rate in Morocco." Risk Governance and Control: Financial Markets and Institutions 6, no. 4 (2016): 268–73. http://dx.doi.org/10.22495/rgcv6i4c2art3.
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Access to microcredit can have a beneficial effect on the well-being of low-income households excluded from the traditional banking system. It allows this population to receive affordable financial services to help them to meet their needs and to improve their living conditions. However to provide access to credit, microfinance institutions should ensure not only their social mission but also commercial and financial mission to enable the institution to perpetuate and become self-sufficient. To this end, MFIs (microfinance institutions) must apply an interest rate that covers their costs and risk, while generating profits, Also microentrepreneurs need, to this end, to ensure the profitability of their activities. This paper presents the microfinance sector in Morocco. It focuses then on the interest rate applied by the Moroccan microfinance institutions; it provides also a comparative study between Morocco and other comparable countries in terms of interest rates charged to borrowers. Finally, this article presents a stochastic model of the interest rate in microcredit built in random loan repayment periods and on a real example of the program of loans of microfinance institution in Morocco.
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Blanco-Oliver, Antonio, Nuria Reguera-Alvarado, and Gianluca Veronesi. "Credit risk in the microfinance industry: The role of gender affinity." Journal of Small Business Management 59, no. 2 (February 2, 2021): 280–311. http://dx.doi.org/10.1080/00472778.2020.1844487.
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Ofeh, Moses A., and Zangue Nguekeu Jeanne. "Financial Performances of Microfinance Institutions in Cameroon: Case of CamCCUL Ltd." International Journal of Economics and Finance 9, no. 4 (March 30, 2017): 207. http://dx.doi.org/10.5539/ijef.v9n4p207.
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Microfinance institutions (MFI) aim at reducing poverty. To achieve such an amazing objective, microfinance institutions in Cameroon have to perform financially well as financial supports from donors are dwelling and irregular. Therefore, to what extent do MFI and industry specific factors determine CamCCUL’s financial performance? By using OLS estimation method to measure the effect of internal and external determinants of CamCCUL’s financial performance in terms of its return on assets, the study exploited a thirty two years secondary data obtained from mix market, CamCCUL’s annual balance sheets and reports to run the regression. The results on the one hand, showed that portfolio at risk, size and operational expenses significantly affect the financial performance of CamCCUL. On the other hand, market concentration had a negative but statistically insignificant effect on CamCCUL’s financial performance. The study therefore recommends that since inefficiency is the bottleneck of CamCCUL, the management should pay great attention to a good expense of management policies or reduce operating costs and credit risk management by employing different technologies to minimize cost. Also, CamCCUL managers should promote training in financial operations, portfolio management, risk assessment and management, management of loan arrears, and strategies, among others.
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Abdullahi, Abdurrahman, and Anwar Hasan Abdullah Othman. "Determinants of Financial Sustainability for Microfinance Institutions: Lessons for Islamic Microfinance Banks in Nigeria." Turkish Journal of Islamic Economics 8, Special Issue (June 15, 2021): 301–20. http://dx.doi.org/10.26414/a2369.
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Islamic microfinance institutions play a major role in the provision of financial services to the poor and underprivileged through non-interest, equity-based products and services. To achieve these critical objectives, however, they need to be financially sustainable, which is threatened by the current economic and financial crisis caused by the Covid-19 pandemic. The objective of this paper is to review the determinants of financial sustainability of microfinance institutions with a view to drawing lessons for Islamic microfinance banks in Nigeria. The paper utilized the literature review methodology to synthesize research findings in the area. The review revealed that the major determinants of financial sustainability of microfinance institutions are the capital structure, asset size, and financial innovation. Others are good risk management and corporate governance frameworks. The paper thus recommended that Islamic microfinance institutions in Nigeria should maintain a robust capital structure that relies more on equity, a lean but diversified Board, and utilize more technology-based services. Most importantly, they should emphasize profit and loss sharing principles in their operations.
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Wachira, Bernard Ndirangu, Humphrey Opiyo Omondi, and Josphat K. Kinyanjui. "Analysis of Third Party Loan Guarantee and Performance of Non-Prime Household Loans in Microfinance Banks in Kenya." Management and Economics Research Journal 03 (2017): 55. http://dx.doi.org/10.18639/merj.2017.03.463579.
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Household loans remain the engine to productivity and economic growth globally. Non-prime household loan is essential, because it enables the borrowers with no collateral to access credit from Microfinance Banks. The survival and sustainability of non-prime household loans globally is therefore significant. Credit risk however remains the main deterrent of the soundness of Microfinance Banks. This leads to the poor performance of microfinance institutions in many economies in the world. Several countries globally are making inroad in reducing the credit risks, which lead to the poor performance of Microfinance Banks. It is still unknown why the credit risk affects the performance of non-prime household loans in the Microfinance Banks domiciled in Kenya. The reason for conducting this study is to determine the level at which the third party loan guarantee and the performance of non-prime household loans relate to the Microfinance Banks in Kenya. Particularly, this study is to determine how the amount secured by guarantee, recoveries from guarantors, percentage of loan secured, and percentage recoveries from guarantors relate to the performance of nonprime household loans in the Microfinance Banks in Kenya. The population was 516 senior management employees of the banks. The researcher conducted a multiple regression analysis for determining the relationship between the amount secured by guarantee—recoveries from guarantors, percentage granted, and percentage recoveries—and the performance of non-prime household loans. The R and R2 were used for determining the strength of the relationship and the coefficient of determination at 0.05 level of significance of variables. The result of this study reveals that there exists a strong relationship between the dependent and independent variables, thereby contradicting the null hypothesis, which states that the relationship does not exist. The percentage of the recoveries from the guarantors over the total recoveries did not have a strong relationship and was not significant. This study recommends the enhancement of the loan guarantee processes to reduce high loan default geared toward good performance of this loan so that it can be accessible to many people.
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Sharma, Pushpa Raj. "An Overview of Microfinance Service Practices in Nepal." Journal of Nepalese Business Studies 7, no. 1 (July 9, 2012): 1–16. http://dx.doi.org/10.3126/jnbs.v7i1.6400.
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Microfinance is not simply banking for the poor; it is a development approach with a social mission and a private sector-based financial bottom line that uses tested and continually adjusted sets of principles, practices and technologies. The key to successful microfinance lies in the ability of the provider to cost-effectively reach a critical mass of clients with systems of delivery, market responsiveness, risk management and control that can generate a profit to the institution. Typically, this profit is ploughed back to ensure the long-term survival of the institution, i.e. the continuous provision of services demanded by its clients. The two long-term goals of microfinance are thus substantial outreach and sustainability. This article focus on microfinance services practices in Nepal on the basis of opinion survey.The Journal of Nepalese Business Studies Vol. Vii, No. 1, 2010-2011Page : 1-16Uploaded date: July 7, 2012
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Gyimah, Adjei Gyamfi, Annette Serwaa Agyeman, and Solomon Adu-Asare. "Assessing the Impact of Operational Flaws on the Performance of Microfinance Institutions in Ghana." International Finance and Banking 7, no. 1 (April 2, 2020): 37. http://dx.doi.org/10.5296/ifb.v7i1.15753.
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Microfinance institutions contribute significantly to the development of a country, and many of these institutions are found in most developing countries including Ghana. However, many challenges have been alleged to stifle the efforts of microfinance companies in their attempt to make their all-important contribution to the development of nations. This study explored the effect of operational flaws on the performance of microfinance institutions in Ghana. The results discovered flaws and challenges associated with the operations of the MFIs in many areas including corporate governance, credit risk management, credit administration, regulatory challenges, and training programs. The study also revealed that such flaws and challenges do harm the overall performance of the MFIs. Based on the findings, it is recommended that MFIs put in place a well-composed and resourceful credit committee to perform the duty of credit risk management in the institutions. The institutions could also reduce their interest rates to encourage their clients to apply for more loans. Lastly, it is recommended that the MFIs take all necessary steps to ensure that they reduce the flaws and challenges they face to mitigate the negative impact of such deficiencies on their performance.
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Geresem, Orichom, and Omeke Michael. "Capital structure, credit risk management and financial performance of microfinance institutions in Uganda." Journal of Economics and International Finance 13, no. 1 (January 31, 2021): 24–31. http://dx.doi.org/10.5897/jeif2020.1096.
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Adusei, Michael. "Female borrowers and credit risk in microfinance institutions: an international study." European J. of International Management 1, no. 1 (2021): 1. http://dx.doi.org/10.1504/ejim.2021.10033925.
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Souleymane SECK, Massamba. "Complementarity Analysis Islamic Banks / Microfinance Institutions in Senegal." International Journal of Innovation Education and Research 7, no. 4 (April 30, 2019): 423–43. http://dx.doi.org/10.31686/ijier.vol7.iss4.1407.
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The purpose of this article is to assess the use of the complementary relationship between the Islamic Bank of Senegal and microfinance institutions in the SME financing process. Currently in Senegal, the constraints on the financing of SMEs are intensifying more and more and continue to limit state policies in the process of promoting sustained economic growth for lack of funding model that responds effectively to investment needs of the latter. In this perspective of marginalization of SMEs by traditional financial intermediaries’ especially traditional banks, the importance of using Islamic Bank / MFI complementarity could be a solution to such a situation of under-financing of SMEs. This new funding model can have a downward impact on transaction costs, reduce risk management and increase the medium- and long-term volume of credit available to SMEs. It would thus promote the financial and social inclusion of Senegalese SMEs. This new funding model can have a downward impact on transaction costs, reduce risk management and increase the medium- and long-term volume of credit available to SMEs. It would thus promote the financial and social inclusion of Senegalese SMEs.
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Abdillah, Kadouri, Benazzou Lotfi, and Laila Bennis. "La Défaillance De La Clientèle Du Micro Crédit Au Maroc : Méthodes Des Scores." European Scientific Journal, ESJ 12, no. 13 (May 30, 2016): 185. http://dx.doi.org/10.19044/esj.2016.v12n13p185.
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The development of microfinance in Morocco dates from the 1990s and is particularly dynamic in the years 2000. Currently, and like other sectors of finance, the microfinance knows the same difficulties concerning the rate of covering. Indeed, credit risk or non-recovery of debts is likely to hinder the development of micro-finance institutions. Thus, an important place should be reserved for the business management of credit risks of borrowers notably through the anticipation of their failure. This anticipation is achievable through the use of a technical score that can affect an individual in a group, namely the right customers and failing. Drawing on the lessons of the discrimination function provided by (Saporta, 1975), judgment can be made by socio-economic and demographic characteristics of each customer and given the form taken by different variables. Calculating scores allowed us to develop a discriminating filter to note clients, identify risk classes and identify those likely to fall.
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Acosta, Freddie Racosas, and Samuel Ndonga. "Musoni Microfinance Kenya: IT-enabled business model." Emerald Emerging Markets Case Studies 4, no. 1 (February 18, 2014): 1–15. http://dx.doi.org/10.1108/eemcs-07-2013-0136.
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Subject area Management Information Systems, Innovation Management, Strategic Management, Strategic Leadership, Organizational Development, Financial Management, Risk Management and Corporate Governance. Study level/applicability MBA. Case overview Musoni Kenya is a Kenyan microfinance institution (MFI) whose idea was conceived in The Netherlands. The Musoni business model is ICT-enabled, 100 percent mobile based, virtually paperless, and runs on an ICT platform housed in Musoni BV in Amsterdam, The Netherlands. It is built on tested mobile technology that allows huge savings on transaction and operating costs. Using mobile payments, clients receive and perform bank operations anytime anywhere. This saves transport costs, transaction time and increases safety as no cash has to be carried around sometimes in dangerous areas. The mobile payments enable clients to make large improvements in loan officer efficiency and makes tracing payments seamless, saving on administration costs. The Musoni branches are also inexpensive as they are only used as the point of contact with customers hence reducing the cost of setting up operations even in remote areas. These efficiencies are passed on to clients in the form of lower interest rates and to stakeholders in the form of good returns on investments. The company aims to use this knowledge, experience and global ICT platform to expand to other countries with a suitable mobile payments environment. Expected learning outcomes The objective of this case is to illustrate general innovation concepts in a leading microfinance company in Kenya. The case documents the innovation dilemma facing the management of the fledgling microfinance company in determining the pace of innovation and the feasibility of launching of a similar service in Uganda following the successful establishment and growth of the company in Kenya. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email: support@emeraldinsight.com to request teaching notes.
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Shahriar, Abu Zafar M., and Mukesh Garg. "Lender–entrepreneur relationships and credit risk: A global analysis of microfinance institutions." International Small Business Journal: Researching Entrepreneurship 35, no. 7 (November 2017): 829–54. http://dx.doi.org/10.1177/0266242617701189.
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Visconti, Roberto Moro, and Maria Cristina Quirici. "The impact of innovation and technology on microfinance sustainable governance." Corporate Ownership and Control 11, no. 3 (2014): 420–28. http://dx.doi.org/10.22495/cocv11i3conf2p3.
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Technical or social innovation, concerning also the creation and commercialization of new products, strategies and management, has a deep actual - and especially trendy - impact on microfinance institutions (MFIs), contributing to reshape their business model, with an impact on their overall risk profile. Innovation is mostly an opportunity even for MF risk mitigation, considering its pervasive impact on risk factors. This original analysis is addressing, in a multidisciplinary and innovative comprehensive way, apparently weakly related topics such as MF governance, and IT issues, within recessionary cycles. This hardly investigated frontier faces key trendy issues, which are likely to deeply reengineer the relationship among different stakeholders, as it has already happened, on a different and more sophisticated scale, with traditional banking. To the extent that technology (with access to Internet, social networks, cashless electronic payments, etc.) reshapes the equilibriums among different stakeholders, it is likely to have important – albeit under-investigated - corporate governance consequences, softening the conflicts of interest among stakeholders and reinforcing the business model, making it more resilient during recessions, with positive externalities on both sustainability and outreach.
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Qabrati, Isuf. "Risk Management in Banking Sector: Empirical Data from Commercial Banks in Kosovo." PRIZREN SOCIAL SCIENCE JOURNAL 3, no. 1 (March 24, 2019): 6. http://dx.doi.org/10.32936/pssj.v3i1.71.
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Financial institutions are an important source of financial system functioning of a country and include banks, pension funds, insurance companies, microfinance institutions, and so on. While the risk of financial institutions presents their ability to lose, consequently the change of the actual cash flow from the planned one. Among the major risks facing financial institutions are credit risk, market risk, operational risk and liquidity risk.The purpose of this paper is to investigate the risk management in financial institutions by making a survey with the banking sector, which accounts for most of the financial activities. For this reason, eight financial indicators are used to calculate the financial performance of the eight commercial banks involved in the research, which operate in Kosovo, taking into account the last two years of their operation. From the data derived from these indicators, using the One-Way ANOVA analysis, differences between banks were investigated according to their performance. As a result, it has been found that there are significant differences between banks according to liquidity risk, credit risk, equity risk and profitability risk. In addition, a linear regression model was also performed, which shows that the change in the return on equity (ROE) depends almost entirely on the change in the other seven indicators included.
Key words: Commercial Banks,Risks, Liquidity, Credit, Equity, Profitability.
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Alaoui, Youssef Lamrani, and Mohamed Tkiouat. "Assessing the performance of microfinance lending process using AHP-fuzzy comprehensive evaluation method." International Journal of Engineering Business Management 9 (January 1, 2017): 184797901773669. http://dx.doi.org/10.1177/1847979017736692.
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Many studies focus on microfinance institutions (MFIs) profitability, client retention, and default rate. Yet, they do not pay much attention to the way in which microfinance (MF) can improve the living conditions of the poor and satisfy their needs. This article presents a new way to assess the performance of MF lending process based on analytic hierarchy process (AHP)-fuzzy comprehensive evaluation method. The aim is to suggest some solutions to improve the performance of processes that create and support MF products and services. Not only should this study contribute to the research literature but it can also help the MFIs to control the risk derived from their operations and increase client satisfaction. Thus, MFIs can enhance their performance and their role in reducing poverty.
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Astawa, I. Putu, Tjokorda Gde Raka Sukawati, and Christantius Dwiatmadja. "CREDIT RISK MANAGEMENT BASED ON HARMONIOUS CULTURAL VALUES TO SUPPORT MICROFINANCE INSTITUTION PERFORMANCE IN INDONESIA." Business: Theory and Practice 21, no. 1 (May 25, 2020): 340–47. http://dx.doi.org/10.3846/btp.2020.9945.
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Credit risk is important in developing the performance of a microfinance institution. The aim of this research was to analyze credit risk through a harmonious cultural approach to improve financial performance. Qualitative approach was used to explore the practice of harmonious culture in managing credit risk. The result of the qualitative study would be utilized to design a questionnaire for quantitative test. Ninety-four (94) companies were selected as the samples by using Slovin Method. The result of the qualitative study explained that harmonious culture-based credit risk was influenced by loan quality, collateral quality, customary rules, traditional leaders, and the belief in karma phala law. Quantitatively, it was found that loan quality, collateral quality, customary rules, traditional leaders, and the belief in karma phala law simultaneously influenced the financial performance. The research result had an implication to risk management in improving financial performance. It could also be used as a new strategy for managers to maintain good relationship with customers.
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Wachira, Bernard Ndirangu, Humphrey Opiyo Omondi, and Josphat K. Kinyanjui. "Analysis of Post Loan Disbursement Allocation and Performance of Non-Prime Household Loan in Microfinance Banks in Kenya." Management and Economics Research Journal 03 (2017): 42. http://dx.doi.org/10.18639/merj.2017.03.456827.
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The part played by non-prime household loans in improving the lives of many people who cannot afford collateral globally cannot be ignored. Many Microfinance Banks in many economies worldwide have tried to maintain the Grameen Bank Model of granting microloans, mainly non-prime household loans. However, the credit risks associated with this initiative hamper the pace at which the granting of this credit facility is expected to grow. This study intends to explore the relationship between the post loan disbursement allocation and the performance of non-prime household loans in the Microfinance Banks in Kenya. The theory associated to this study is the Credit Risk Theory. This theory, which is regarded as credit structural theory, was developed by Merton in 1972. The descriptive survey research design method was applied, and the sample size was 150 respondents. The data-collection tool used was a questionnaire. A logistic regression analysis was conducted for the purpose of predicting non-prime household performance in the Microfinance Banks using training budget, recoveries budget, percentage of training budget, and percentage of recoveries budget as predictors. The Wald test shows that training budget, recoveries budget, and percentage of training budget were good predictors, making a significant contribution to prediction. The percentage of budget on recoveries was not a significant predictor. The Microfinance Banks should enhance the performance of non-prime household loans through capacity building to the borrowers and educate the borrowers on dangers of enforced loan recoveries. The government, through the Central Bank of Kenya, should have a training policy for the Microfinance Banks so that they can enlighten the borrowers on proper financial management to avoid conflicts with borrowers during loan recoveries.
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Taj, Fozia. "Role of Managerial Competencies and Risk-Taking Behavior in Financial Service Outreach of Microfinance Banks in Pakistan." IBT Journal of Business Studies 15, no. 2 (2019): 25–42. http://dx.doi.org/10.46745/ilma.jbs.2019.15.03.03.
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This study aims to investigate the relationship between the managerial risk-taking, managerial competencies and financial service outreach of microfinance banks in Pakistan. Primary data was collected from 36 branches of microfinance banks (MFBs) in nine cities. The unit of investigation is the branch manager and senior credit officer of each MFB branch. Descriptive statistics, correlation and regression, are used for data analysis. This study found a positive relationship between financial service outreach of MFBs and managerial competencies; financial service outreach also has a positive relationship with the risk-taking behavior of managers. There is a positive relationship between risk-taking behavior and financial service outreach of banks. The risk-taking behavior partially mediates the relationship between the managerial competencies and financial service outreach. The magnitude of the relationship between managerial competencies and outreach is significant, and its magnitude reduces when there is the mediation of managerial risk-taking behavior between them. Thus, managerial competencies, along with risk-taking behavior are the keys drivers of financial service outreach of MFBs. This study informs MFB’s top management and policymakers that competencies of managers and their calculated risk-taking propensities determined outreach performance of the MFBs.
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Ashta, Arvind, and Mark Hannam. "Hinduism and microcredit." Journal of Management Development 33, no. 8/9 (September 2, 2014): 891–904. http://dx.doi.org/10.1108/jmd-07-2013-0091.
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Purpose – The purpose of this paper is to show that the microfinance industry practices can benefit from the culture and spiritual traditions of a country. Design/methodology/approach – The authors use the Bhagavad Gita and the codes of Manu and Kautilya to describe the background of Hindu teaching and practical wisdom. The authors use a case study of a Hindu microfinance institution (MFI). Findings – The authors find that Indian spirituality is a case-based application of learning through experience. Research limitations/implications – The case used in this study is one of a religious organization led MFI. It would be interesting to have follow up case studies of for-profit organizations and study their philosophy and links to spiritual traditions. Practical implications – The authors find that business in general, and MFIs in particular, should adopt risk-based pricing. The specificities of each product, its delivery and price should be based on continuous learning from experience of helping customers. Thus a case-based approach to product development and pricing is required. Social implications – This paper is a response to the current criticism of microfinance and argues for more tolerance on the part of society and more sensitivity on the part of MFIs. The case study shows that with the right attitude, it is possible to balance societal interests, customer needs and the institution's growth. Originality/value – This is the first paper on microfinance which looks at outsourcing from a spiritual viewpoint and launches a debate on whether “playing God” is useful.
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Lekefack, Bonaventure, Joseph Nzongang, Wulli Faustin Djoufouet, and Nicodème Kemdong Tenekeu. "The Influence of Internal Credit Risk Management Tools On The Performance of Cameroonian Microfinance Institutions." International Journal of Economics and Management Studies 8, no. 8 (August 25, 2021): 62–73. http://dx.doi.org/10.14445/23939125/ijems-v8i8p111.
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