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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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Bakker, Anuschka, Jaap Schaveling, and André Nijhof. "Governance and microfinance institutions." Corporate Governance 14, no. 5 (September 30, 2014): 637–52. http://dx.doi.org/10.1108/cg-03-2014-0032.
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Purpose – This paper aims to determine the influence of governance mechanisms on sustainability and outreach of microfinance institutions (MFIs). Corporate governance has been identified as a key bottleneck in strengthening MFIs’ sustainability (financial performance) and increasing their outreach (social impact). Design/methodology/approach – First, a literature study to give insight in the microfinance sector is provided. Subsequently, the data research has been performed based on the statistics of one of the funds of a Dutch independent investment manager, which is focused on responsible investments in developing countries. Hierarchical multiple regression analyses were conducted to examine the association between governance mechanisms and the respective dependent variables. Findings – The results show that boards of a MFI with insiders (for example, employees) are a significant predictor of sustainability. Regulation impacts sustainability significantly in a negative way. Overall, the study shows that only a limited number of variables influence the sustainability and outreach of an MFI. Research limitations/implications – The limitation of the studied investment fund is that it invests in expanding and mature MFI’s. So the results of this research can only be generalized to expanding and mature MFI’s. Practical implications – The governance mechanisms that are recommended in the industry guidelines and which are studied here are often not relevant in respect to sustainability and outreach of MFIs. The approach to microfinance governance should be broadened by focusing more on stakeholders and the decision making process in an MFI. Social implications – Good governance is key for the microfinance institutions and even more complicated than for regular companies that do not have a double bottom line (sustainability and outreach). to be successful in the future, and for clients to reach the best end result, it is essential that the governance mechanisms that influence the bottom line are determined. Originality/value – Not much research has been done with respect to the governance mechanisms, which have impact on the sustainability and outreach of MFIs.
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Ashraf, Ali, M. Kabir Hassan, and William J. Hippler III. "Performance of microfinance institutions in Muslim countries." Humanomics 30, no. 2 (May 6, 2014): 162–82. http://dx.doi.org/10.1108/h-11-2013-0073.
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Purpose – The aim of the paper is to analyze whether performance measures and their factors for microfinance institutions (MFIs) in Muslim countries are significantly different from those in their non-Muslim counterparts, central to the Islamic scholars' argument that religious and cultural norms in Muslim countries may drive the preference of Islamic microfinance over conventional microfinance. Design/methodology/approach – Using a cross-sectional dataset of 2,138 firm-years for 754 different MFIs across 83 countries, 33 Organization of Islamic Conference (OIC) member Muslim countries and 50 non-member countries, we analyzed the MFI performance based on three sets of measures: outreach, loan recovery and profitability and overall financial performance measures, with respect to two sets of explanatory variables, namely, country-specific and firm-level variables. Findings – Results show that country gross domestic product size is positively related with profitability, and the percentage of women borrowers is also significant in driving loan recovery and firm profitability in the OIC sample, but they are otherwise not significant for the rest of the world sample. Practical implications – This study contributes to the understanding of the core argument in the motivation of Islamic MFIs, which is whether cultural and religious factors are important for MFI success in Muslim countries. Originality/value – This study introduces a variable that measures the difference between a country's independence year and their OIC membership year as a proxy for the “country religious inclination” of a Muslim country. Results suggest that countries with delayed membership in OIC show lower inclination to popular Islamic beliefs and higher market penetration of conventional microfinance outreach. Positive relationships among a country's religious inclination and loan loss ratios and loan provisions are also consistent with the moral hazard hypothesis that few religious communities may be more prone to default.
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Sari, Maheni Ika, and Retno Endah Supeni. "Gender, Subsidies and Financial Capital Impact on Microfinance Institutions Performance." Global Journal of Business and Social Science Review (GJBSSR) Vol. 3(2) 2015 3, no. 2 (April 20, 2015): 67–71. http://dx.doi.org/10.35609/gjbssr.2015.3.2(9).
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Objective - The purpose of this study was to investigate the influence of gender, subsidies, and financial capital on microfinance institutions performance. Methodology/Technique - Multiple linear regressions were used to analyze data. The type of data which used is secondary data from historical financial statements obtained from the Department of Cooperatives and SME's Jember. Findings - The study shows that gender and subsidies have negatively affected to ROA. Once applied physical capital and age as control variables strengthened the significance of the effect of both on ROA. Financial capital has significant positive effect on ROA. Novelty - Extended knowledge on factors affecting microfinancial institution's performance. Type of Paper - Empirical Keywords: Gender, Subsidies, Financial Capital, ROA, Microfinance Institutions.
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Nurasyiah, Aas. "AN EMPIRICAL STUDY OF ISLAMIC MICROFINANCE PERFORMANCE FOR POOR FAMILY: MAQASHID AL-SHARIA PERSPECTIVE." AFEBI Islamic Finance and Economic Review 3, no. 01 (March 6, 2020): 46. http://dx.doi.org/10.47312/aifer.v3i01.253.
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<p><em>This research motivated by Islamic Microfinance performance measurement which still adopting on the performance measurement of microfinance in general that limited to the measurement of material. Therefore, efforts urgently needed to introduce more holistic measurement in assessing the performance of Islamic Microfinance based on tawheed principle. Thus, this study aims to measure the performance of Islamic Microfinance institutions based on Maqashid Al-Sharia. This research method uses quantitative approach with descriptive quantitative research design, which measures variables based on certain indicators. The location of the research is KOPMU-DT as one of the Islamic Microfinance institutions located in Bandung. The population of the study was the members KOPMU-DT wide-spread, among thousand people, but the withdrawal sample technique uses non-probability sampling with a sample of 100 members, based on the criteria that have been determined. Based on the research result, generally the members of KOPMU-DT increased living standards of the family economy and the performance of running micro-businesses. In Maqashid Al-Sharia perspective, the members experience a change in the principles of Ad-Din Al-Aql, A-nafs, An-Nasl and Al-Maal. However, among five principles, Al-Aql increases lower than other principles. In the future, to improve the performance of Islamic Microfinance, especially in KOPMU-DT, needs technical effort / business of accompaniment improvement to develop entrepreneurship from members. In addition, needs to give appreciation to the consistent members and disciplined in order to refund to add its financing to stimulate the operating business, without losing spiritual accompaniment to strengthen the achievement of Maqashid Al-Sharia of the empowerment members of Islamic Microfinance institution.</em></p><strong><em>Keywords: </em></strong><em>Islamic Microfinance, Maqashid Al-Sharia, Performance</em>
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Shu-Teng, L., M. A. Zariyawati, M. Suraya-Hanim, and M. N. Annuar. "Determinants of Microfinance Repayment Performance: Evidence from Small Medium Enterprises in Malaysia." International Journal of Economics and Finance 7, no. 11 (October 27, 2015): 110. http://dx.doi.org/10.5539/ijef.v7n11p110.
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<p>Microfinance was introduced in Malaysia to provide financing services to the poor and Small Medium Enterprises (SME) to start up business. The borrower may use the facility to finance business activities such as to purchase assets and additional capital to expand their business. Microfinance helps SME that have limited access to get loan from financial institutions. Financial institutions specifically commercial bank refuse to provide microfinance facilities to SME due to the high default rate among the majority of borrowers who obtain loan without collateral. In addition, the percentage of non-performing loan (NPL) of microfinance in Malaysia has been increasing. Therefore, the objective of this research is to analyze the determinants of SMEs loan repayment performance in Malaysia. Results showed that there are four variables with significant relationship towards loan repayment namely educational level, business experience, amount of loan and loan tenure.</p>
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Triki, Mohamed Wajdi, and Younes Boujelbene. "Determinants of the Performance of African Microfinance Institutions." International Journal of Sustainable Economies Management 3, no. 4 (October 2014): 45–58. http://dx.doi.org/10.4018/ijsem.2014100105.
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Performance evaluation is part of the chain of financial transparency which involves the production, verification, analysis, synthesis, dissemination and use of information on the financial performance of a micro-finance institution (MFI). In this study, the authors will try to show the convergence or divergence between social performance and the financial performance by answering the following question: are there to arbitration / compatibility between the two types of performance. To answer this question, this study will be organized in such manner the first section outlines a brief literature review of microfinance in terms of both welfarist approaches (social) and institutionalists. The second section describes the characteristics of the sample of 141 MFIs in 21 countries in the MENA region and Africa based on the year of 2005 and 2010. By defining the variables that identify each type of performance with a new index created for social performance called “Depth of Outreach” (noted DEPTH). The financial performance is described by financial indicators namely profitability, portfolio quality and productivity. The authors finish this study by a third section which presents the main results of a factor analysis applied to the sample in order to study the nature of relationship between the two types of performance.
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Sari, Yuli Indah, and Widiyanto Bin Mislan Cokrohadisumarto. "MODELING SUSTAINABILITY MODEL OF ISLAMIC MICROFINANCE INSTITUTIONS." Journal of Islamic Monetary Economics and Finance 5, no. 4 (December 27, 2019): 713–40. http://dx.doi.org/10.21098/jimf.v5i4.1127.
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Islamic microfinance institutions (IMFI) - such as the Baitul Maal wat Tamwil (with cooperative legal entities) that have been established in Indonesia - as part of the shariah-compliant financial industry sector (part of the halal sector) - need to be maintained their sustainability so as to encourage efforts to eradicate poverty and promote economic growth. In observing the sustainability of BMT, studies involving aspects of human quality that carry out internal activities are rarely examined in other studies. Therefore, the purpose of this stud is to create a model that is useful for predicting the sustainability of IMFI especially BMT based on variables that are considered important, namely; financing growth, Islamic human capital, fraud, and Islamic leadership. The model was analyzed using multiple regression analysis based on the stepwise method. Primary data (cross-sectional) taken in 2019 using questionnaires consisting of 105 respondents from the administrators and managers of BMTs in Semarang and Pekalongan Residency areas. We found that only two variables have a significant influence on the sustainability of Islamic microfinance institutions, these variables are financing growth and Islamic human capital. The results of the study can be used by practitioners to improve the performance of Islamic Micro Finance, especially BMT, through the distribution of funding in the context of economic improvement (especially micro-enterprise), spiritual strengthening for human resources owned, risk prevention, and appropriate leadership criteria.
JEL Classification: G21, J24, Q01
Keywords: Islamic microfinance, Human capital, Sustainability, Model
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Gudjonsson, Sigurdur, Kari Kristinsson, Haukur Freyr Gylfason, and Inga Minelgaite. "FEMALE ADVANTAGE? MANAGEMENT AND FINANCIAL PERFORMANCE IN MICROFINANCE." Business: Theory and Practice 21, no. 1 (February 6, 2020): 83–91. http://dx.doi.org/10.3846/btp.2020.11354.
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The purpose of the article is to investigate whether female presence in microfinance institutions’ management team, i.e. board members, managers and loan officers, will improve their financial performance. We combine financial data on MFIs that is available from the MIX Market database with original data on the gender composition of MFIs’ management team, who include board members, managers and loan officers. This original dataset of 223 MFIs is analyzed using Logit-Tobit regression models with return on assets (ROA) as the dependent variable and proportion of female board members, female loan officers and female managers as the main independent variables. We find that a higher proportion of female managers and female loan officers improve financial performance in microfinance, while a higher proportion of female board members does not. Our results indicate that a major contributor to the financial sustainability of microfinance institutions is having a higher rate of women in vital decision-making roles, especially lower level management positions.
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Md Nazim Uddin, Hamdino Hamdan, Nor Azizan Che Embi, Salina Kassim, and Norma Bt Md Saad. "Job Satisfaction of Female Employees in Microfinance Institutions of Bangladesh." International Journal of Entrepreneurial Research 3, no. 1 (February 29, 2020): 1–7. http://dx.doi.org/10.31580/ijer.v3i1.925.
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The purpose of this study is to examine the level of female employee satisfaction regarding their job of microfinance institutions in Bangladesh. Moreover, it focuses on the various factors that influence female employee job satisfaction of microfinance institutions. The study utilised quantitative research methods and used Herzberg’s motivation-hygiene theory (19590. A total of 24 structured questionnaires with five dimensions have been given to 100 female respondents of selected microfinance institutions in Bangladesh. The findings reveal that some variables (performance-based salary increment, available opportunities for promotion, satisfaction on job environment, colleagues help during huge workload, opportunity to interact with other employees on a formal level, use of skill, experience & qualification, recognition for good work, and learning opportunity) have significant impact on female employee satisfaction in the microfinance institutions. The limitation of the studied investment fund is that it invests in expanding and mature microfinance institutions (MFIs). So the results of this research can only be generalised to expanding and mature MFIs. This study aims at contributing for better female employees job satisfaction of the MFIs given that it has substantial implications on financial benefit, work environment, job security, decision making, training and resources of the MFIs.
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Wardayati, Siti Maria, Nining Ika Wahyuni, and Nur Hisamuddin. "PENGEMBANGAN MODEL REDUKSI RESIKO DAN KALASI KINERJA PEMBIAYAAN MUDHARABAH PADA LEMBAGA KEUANGAN MIKRO SYARI’AH." INFERENSI 6, no. 2 (December 1, 2014): 331. http://dx.doi.org/10.18326/infsl3.v8i2.331-350.
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The development of Islamic financial institutions in Indonesia is very fast eventhough it is a new institution that all products are new in this Muslim-majoritycountry. This study will test the competence variables account syariah officer andrisk of financing in relation to the financing is affecting performance, and will alsotest the variable business ethics and information asymmetry in relation to risk andfinancial performance. Sample of this research is Islamic Microfinance Institutionsin Jember and Bondowoso with respondent managers and leaders Sharia Microfinance Institutions using primary data obtained through questionnaires. This studyused a quantitative approach and the data processing using Partial Least Square(PLS). Final output of this research is the development of arisk reduction model offinancing is an attempte scalation of financing performance.
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Amelec, Viloria, and Vasquez Carmen. "Relationship Between Variables of Performance Social and Financial of Microfinance Institutions." Advanced Science Letters 21, no. 6 (June 1, 2015): 1931–34. http://dx.doi.org/10.1166/asl.2015.6163.
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Niti Bhasin and Preeti Gupta. "Drivers of Sustainability of Indian Microfinance Institutions." Think India 19, no. 3 (December 12, 2016): 1–16. http://dx.doi.org/10.26643/think-india.v19i3.7778.
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Microfinance is the most preferred way of satisfying the essentials of poor which are generally not taken care of by formal financial institutions. It is the way to facilitate them to uphold self-employment through various financial services like provision of funds, insurance, credit etc. Microfinance institutions cater to the need of major section of society by providing access to funds and other financial services, which basically lack access to these services. To accomplish this moral objective microfinance institutions (MFIs) need to be profitable and sustainable. Thus most important question arises is: what factors drive the sustainability of MFIs. The aim of microfinance is to alleviate poverty with the help of increasing access to finance. For well-being of the poor, good sustainable performance of MFIs must be achieved. Therefore, the present study attempts to explore different factors which might affect sustainability of Indian MFIs. Panel regression analysis is used to identify the determinants of sustainability of Indian MFIs. Due to non-availability of data for most of the MFIs, five years (2009-2013) data for 46 MFIs shall constitute our sample size. Results of the study exhibit that variables such as average loan balance, borrowers per staff member, return on asset, and yield on gross loan portfolio are major determinants of sustainability (financial and operational sustainability) of Indian MFIs.
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Guilaire, Dadem Kemgou Edouard, Wafo Hilaire Cabrel, and Manetsa Eloge Lord. "Mécanismes de Financement et Performance des IMFs en Contexte Camerounais: Une Application sur les COOPEC (Coopérative d’Epargne et de Crédit) et les IFNB (Institution Financière Non Bancaire)." European Scientific Journal, ESJ 13, no. 19 (July 31, 2017): 332. http://dx.doi.org/10.19044/esj.2017.v13n19p332.
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The objective of this study is to identify how the policies of financing influence the performance of Microfinance institutions (MFI). In this study, we used the MIX Market database in order to bring out information relating to the variables of financing and performance structures. The data used was obtained from eight Institutions of Microfinance in Cameroon, and were collected over a period of eight years going from 2006 to 2013. An analysis of the regressions based on a sample of 64 observations collected on 8 Cameroonian MFIs for 8 years, on the one hand, shows that the level of indebtedness also influences financial and social performance negatively
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Harelimana, Jean Bosco, and Musangamfura Ignace. "Major Challenges Affecting Financial Performance of Microfinance Institutions in Rwanda." Management and Organizational Studies 5, no. 4 (October 18, 2018): 41. http://dx.doi.org/10.5430/mos.v5n4p41.
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This paper sought to determine the specific challenges affecting financial performance of Microfinance institutions(MFIs) in Rwanda.This study used the cross-sectional survey research design. The target population of the study was 199 respondentsfrom clients of selected Microfinance institutions and 53 respondents from managers and staff of MFIs. Aquestionnaire was used to collect data. The data was first explored for the underlying factor structure among thestudy variables through factor analysis. Thereafter, the study undertook both descriptive and inferential statisticalanalyses.The findings revealed that liquidity, NPL, return on asset and return on equity are powerful instrument of financialperformance of MFIs in Rwanda, it assumes that the strategies to be taken in order to address the main challengesfacing MFIs in Rwanda are: Legal and Regulatory environment, Support infrastructure, Client Protection, Financialinclusion, Financial Education as well as Gender and Youth inclusion. The policy and law should also be reviewed toallow the transformed MFIs a tax holiday and exempt from tax any assets donated or transferred to the deposit takingmicrofinance institutions.
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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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Costa, Ruan Rodrigo Araújo da. "The relationship between the performance and legal form of microfinance institutions." Revista Contabilidade & Finanças 28, no. 75 (July 20, 2017): 377–89. http://dx.doi.org/10.1590/1808-057x201703660.
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ABSTRACT This paper investigates the relationship between the legal forms adopted by microfinance institutions (MFIs) and their performance within three scopes: financial performance, social performance, and efficiency in resource allocation. The MFIs studied are classified into four groups: banks, non-governmental organizations, cooperatives, and a fourth group formed of for-profit institutions not characterized as banks, made up of non-bank financial institutions (NBFIs) and rural banks. The data used are annual and cover the six years from 2007 to 2012. The quantitative regression model with panel data was used together with dummy variables to compare between the four groups of legal forms, except for the group made up of NBFIs and rural banks, which was not represented by any dummy variable. 304 MFIs from 59 countries made up the sample. In the study it was observed that larger MFIs have higher profits, higher returns, and higher operational self-sufficiency rates than smaller MFIs, indicating that MFI growth could enable consolidation in the microfinance market. The results also indicate that for smaller MFIs the way to consolidate and improve the indicators could be through assimilating or merging with other MFIs. It was also noted that non-bank financial institutions and rural banks are able to serve more customers and that cooperatives provide smaller loans, causing a bigger social impact, and that they obtain higher returns and profits. The results indicate that these legal forms may be the most appropriate for the microfinance market.
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George Gachuru. "Effect of Customer Security on Performance of Online Banking on Microfinance Institutions in Nakuru Town, Kenya." Editon Consortium Journal of Business and Management Studies 2, no. 1 (April 10, 2020): 49–55. http://dx.doi.org/10.51317/ecjbms.v2i1.120.
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The study aimed at determining the effect of customer security on the performance of online banking on microfinance institutions in Nakuru CBD. The study is significant to the Microfinance Institutions in that; it will benefit management and staff of MFI and the government understudy by gaining insights into how their institution can effectively deal with the challenges that they face in managing their clients and ensuring they grow their business. The increasing number of consumers of online banking shows that the level of adoption of online banking has improved. Several variables can influence the amount of adoption of online banking. The researcher used survey design where the target population comprised of 35 respondents. These were Branch managers, Chief Credit officer/s and the IT support of the MFI in Nakuru CBD. The study used census method, and a questionnaire containing closed-ended questions was used as the data collection instrument for the research. Descriptive statistics were used in data analysis and presentation of the results was in the form of tables, charts and graphs. The findings revealed that security affects the implementation of online banking to a large extent. Based on this finding, the researcher recommended that Microfinance Institutions should improve on issues concerning customer security in that, there should be no delay. The researcher suggested further study should be done on factors affecting adoption of M-Pesa money transfer bill payment.
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Aguenaou, Samir, Sarah Allouch, Nada El Maliki, and Jawad Abrache. "Financial Performance and Sustainability of Moroccan Microfinance Institutions: An Empirical Study." Accounting and Finance Research 8, no. 4 (October 15, 2019): 144. http://dx.doi.org/10.5430/afr.v8n4p144.
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This study explores the determinants of the financial performance and sustainability of Moroccan Microfinance Institutions (MFIs). Through the use of panel data concerning 10 MFIs (available on the MIX platform) with different time frames, three OLS models are run and aim to explain MFIs financial performance and sustainability using independent variables related to the size of the MFIs, the quality of their loan portfolios, the degree of outreach, and their productivity. The results obtained show that: (1) the personnel productivity contributes significantly to the MFIs’ Return on Assets and their sustainability, and (2) the loan repayment level of MFIs customers is an important determinant of their sustainability.
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Thrikawala, Sujani, Stuart Locke, and Krishna Reddy. "Board structure-performance relationship in microfinance institutions (MFIs) in an emerging economy." Corporate Governance: The International Journal of Business in Society 16, no. 5 (October 3, 2016): 815–30. http://dx.doi.org/10.1108/cg-12-2015-0166.
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Purpose The purpose of this paper is to investigate the relationship between board structure, financial performance and outreach of microfinance institutions (MFIs) in Sri Lanka, using unbalanced panel data for 300 MFI-year observations for the period 2007 to 2012. Design/methodology/approach Empirical research relating to governance practices in MFIs is still in its infancy, and further studies are needed to determine how improved governance practices may enhance sustainability and outreach of MFIs, especially in emerging economies. The authors use regression techniques to examine whether board structure has an influence on MFI performance. Findings After controlling for internal corporate governance variables, regulatory status, size, age, leverage and year effects, the authors report that board structure does contribute to the financial performance and outreach of MFIs in Sri Lanka. Research limitations/implications The availability of data in the public domain captures the major MFIs but does constrain the generalisability of findings. Practical implications This study enables individual MFIs to evaluate potential restructuring of their boards to promote a dual mission and achieve a more accelerated economic development. Social implications The findings may encourage policy makers to promulgate policy guidelines to deepen MFI outreach to the poorest people. Originality/value Inconsistent findings in prior studies and a general lack of empirical results for the microfinance industry have led to an unclear message regarding corporate governance and MFI performance. This study fills the research gap, contributing to the existing corporate governance literature in the microfinance sector and providing evidence from an emerging economy.
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Djalil, Muslim A., Muhammad Adam, and Hendra Syahputra. "Core Competency and Industry Environment: Its Influenceson the Competitive and Cooperative Strategyand Its Implicationon the Performance of Sharia-based Financial Institutionsin AcehProvince." GATR Global Journal of Business Social Sciences Review 2, no. 1 (January 15, 2014): 125–41. http://dx.doi.org/10.35609/gjbssr.2014.2.1(14).
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Objective : The aims of the research are to describe and investigate the causal relationship among underlying exogenous Variables (Core Competency and Industry Environment) and Endogenous Variables (Competitive Strategy and Cooperative Strategy and Performance) of Sharia Based Banking and Microfinance Institutions in the Province of Aceh, Indonesia. Methodology/Technique : The research consists of quantitative survey involving 252 respondents deriving from 79 Sharia based financial Institutions in the region. The collected data are processed by using SEM-Amos. Findings : All of eight hypotheses of variables tested in the model have a significant influence among constructs, except for two hypotheses, namely, between Core Competency and Cooperative Strategy and between Cooperative Strategy and Performance. Another finding is that core competency and Industry environment have stronger influence directly on performance than that influence through the intervening variables of Competitive Strategy and Cooperative Strategy. Type of Paper: Empirical Paper Novelty - The integration of RBV Approach (e.g. Core Competency) and Industrial Organization View(I/OV) Approach (e.g. Industry Environment) to boast superior business performance is particularly new to the context of sharia-based financial institutions. The research contributed to the literature on sharia-based banking and microfinance and strategic management. Keywords: Core Competency; Industry Environment; Competitive Strategy; Cooperative Strategy; Performance.
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Abdirashid, Ali Abdi, and Ambrose O. Jagongo. "Group Lending and Loans Performance in Micro-Finance Institutions in Nairobi City County, Kenya: Case of Kenya Women Microfinance Bank Limited." International Journal of Current Aspects 3, no. III (June 25, 2019): 96–110. http://dx.doi.org/10.35942/ijcab.v3iiii.33.
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The microfinance industry has grown over the years. However, there is a growing concern on the loan default among microfinance institutions in Kenya. This may be a pointer to increased ineffectiveness of the institutions’ various lending programs. This study seeks to examine the relationship between group lending and loans performance in micro-finance institutions in Kenya, with a focus on KWFT. The study specifically sought to: determine the relationship between group self-internal regulations among group members and loans performance in KWFT microfinance; to examine the relationship between credit appraisal process of members and loans performance in KWFT microfinance; to establish the relationship between credit policy on group loans and loans performance in KWFT microfinance; and to assess the relationship between credit risk control measures on the group and loans performance in KWFT microfinance. The study was guided by theory of group lending, Asymmetric Information theory and Portfolio Theory. The study adopted a descriptive research design. The target population consisted of approximately 60 respondents in six KWFT branches within Nairobi County. The unit of observation was the credit managers and credit/ loan officers. Since the population was small, a census study was adopted whereby the entire population was considered for the study, thus all the 60 respondents formed the sample size for the study. The study collected primary data though a questionnaire. The developed questionnaire was checked for its validity and reliability through pilot testing. The collected data was analyzed using descriptive and inferential statistics with the help of SPSS software. The descriptive statistics included frequency distribution tables, means, standard deviation and measures of relative frequencies. The inferential statistics entailed a regression analysis which will establish the relationship between variables. The study findings indicate that strong correlation coefficient between loans performance at KWFT and group self-internal regulations, credit appraisal process, credit policy and credit risk control measures and they are all statistically significant. The study concludes that groups financed had put in place mechanisms to ensure that the group members repay loans in time, credit appraisal process employed to inform lending to groups were amount of credit the group qualifies, the ability of the group to repay and the nature of collateral to be imposed, rates charged on the group loans determines the effectiveness of repayment of loans by the members and the period the group is given to repay the loans determines the loan performance. The study recommends that organizations participating on group loans need to ensure that the group are promoting good governance in their leadership and administration, the study recommends that those in charge of loans need to work for stability in the macro-environment to ensure interest rates charged by MFIs remain stable and affordable and the study recommends that micro-finance institutions should put in place a credit risk management team whose mandate will be to establish well defined credit control policy and guidelines.
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Roy, Prasenjit, and Ambika Prasad Pati. "Double bottom line commitments of microfinance: evidence from Indian institutions." International Journal of Social Economics 46, no. 1 (January 14, 2019): 116–31. http://dx.doi.org/10.1108/ijse-08-2016-0240.
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Purpose The purpose of the paper is to confirm the adherence of double bottom line objectives by the microfinance institutions (MFIs) of India and, further, to identify the causal factors that work out their double bottom line commitments. Design/methodology/approach The study uses an empirical data set for the period of 10 years, i.e. from 2005–2006 to 2014–2015, gathered from www.mixmarket.org. It follows an exploratory approach with overall and segmented performance analysis. Further, a panel data regression model is applied to identify the causal factors of double bottom line. Findings The study finds that MFIs are adhering to the notion of double bottom line. The segregated analysis does not give any solid indications of trade-off. The mature and small MFIs are found to be better in attaining social objective but the new and large are better in sustainability. The non-governmental organization (NGO) category is more committed to the double bottom line than the non-NGO. The causal analysis could not show any relationship between financial performance and outreach. Though age and outreach size show relationships with small loan sizes, they do not influence sustainability. The operating and financial expenses along with portfolio quality are found to be the main causal variables of sustainability. Practical implications There are indications for the policy makers to frame regulations and prepare a roadmap for the mature and the large MFIs. This would help them adhere to the double bottom line, which would further streamline the operations of the MFIs in the long run. Containing operating expenses and controlling the asset quality still remain to be the challenges which need to be addressed with proper policy guidelines. Originality/value The analysis of the study focuses on industry classifications, which make it more intriguing in nature given the fact of the varied features like age, legal status and outreach. India being the largest microfinance market in the world has limited studies. Most of the studies in double bottom line are based on a cross-country analysis, which generalizes the individual characteristics. The study fills this gap and adds to the understanding of the double bottom line commitments in the Indian context.
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Nalukenge, Irene. "Board role performance and compliance with IFRS disclosure requirements among microfinance institutions in Uganda." International Journal of Law and Management 62, no. 1 (March 16, 2020): 47–66. http://dx.doi.org/10.1108/ijlma-08-2017-0195.
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Purpose The purpose of this paper was twofold. First, to explore the currently performed board roles. Second, to investigate the relationship between board role performance and compliance with international financial reporting standard (IFRS) disclosure requirements among microfinance institutions (MFIs) in Uganda. Design/methodology/approach This study used a mixed methods research design. The relationship between board role performance and compliance with IFRSs requirements was tested using Partial Least Squares. Confirmatory Factory Analysis and interviews were conducted to establish the performed board roles. Findings The findings suggest that among the known board roles of strategic, service and control, the control role is mostly performed. Results further suggest that board role performance is a significant predictor of compliance with IFRS disclosure requirements. In terms of control variables, MFI size and membership to the Association of Microfinance Institutions of Uganda were significant. Other control variables (liquidity, leverage and profitability) are not significantly associated with compliance with IFRS disclosure requirements. Research limitations/implications Compliance with IFRS disclosure requirements was based on one financial year owing to a lack of data for many years. Practical implications The results are important for governing boards regarding improving compliance with IFRS disclosure requirements. The results specifically suggest that MFIs’ boards must focus on performing the control role if compliance with IFRS disclosures requirements is to improve. Originality/value This paper is original because it uses perceptions to measure board role performance, unlike previous studies that used proxies such as board size and proportion of non-executive directors to infer board role performance. The study also reveals that it is only the control role that is important in enhancing compliance with IFRS disclosure requirements. Such evidence does not currently exist.
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RE, RAMEL YANUARTA, HULWATI HULWATI, and ROZALINDA ROZALINDA. "PENGARUH KEDALAMAN JANGKAUAN PEMBIAYAAN TERHADAP KEBERLANJUTAN KEUANGAN LEMBAGA KEUANGAN MIKRO SYARIAH." JEBI (Jurnal Ekonomi dan Bisnis Islam) 4, no. 1 (June 30, 2019): 15. http://dx.doi.org/10.15548/jebi.v4i1.216.
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Analysis of the sustainability of the microfinance institutions cannot be separated from its outreach. This study aims to analyze the effect of the depth of outreach on financial sustainability in the Koperasi Jasa Keuangan Sharia Baitul Maal wa Tamwil (KJKS BMT) kelurahan Kota Padang. This study is an analysis of causality. The analysis was carried out for two years of financial statements, 2014 and 2015. Samples were taken using a purposive sampling approach. The financial sustainability issues are analyzed with two variables, namely return on assets (ROA) and non-performing financing (NPF) which are used as dependent variables in multiple regression models. As independent variables, the average value of financing provided by the KJKS BMT kelurahan Kota Padang is used as a proxy for the level of the depth of outreach and several other control variables. The results of this study reveal that there is a trade-off between the depth of outreach from financing services to poor households to the BMT KJKS kelurahan Kota Padang and financial sustainability as is the case in conventional microfinance institutions. So, naturally in practice there will be reluctance in the KJKS of BMT Kota Padang urban village to provide financing services to poor households because of their negative financial performance.
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Purba, Kartika Silvia, Animah Animah, and Lalu Takdir Jumaidi. "KOMPETENSI ACCOUNT OFFICER ANALISIS SYARIAH TERHADAP PERFORMANCE PEMBIAYAAN MUDHARABAH DENGAN RESIKO PEMBIAYAAN SEBAGAI INTERVENING (studi pada lembaga keuangan mikro syariah se pulau Lombok)." Jurnal Aplikasi Akuntansi 2, no. 2 (October 12, 2018): 121–40. http://dx.doi.org/10.29303/jaa.v2i2.27.
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The objective of this study is to determine the influence of sharia account officers competence on the performance of mudharabah financing with the financing risk as intervening variable. Islamic microfinance institutions were selected as object of study in order to determine the extent of the theory related to the variables studied could be applied on the Islamic microfinance institutions. The data were obtained using a questionnaire distributed to the head of main office or branch office of sharia cooperative on the island of Lombok with requirements of sharia cooperative, BMT, boarding schools cooperative, and Islamic rural banks which had applied and have the authorization of mudharabah financing in lending decisions. The results showed that the sharia account officer competences have significant and negative influence on financial risk. Sharia officer competences also have significant and positive influence on the performance of financing. The results also showed that the risk of financing have significant and positive influence on the performance of financing. Generally, sharia account officer competence is important in minimizing the risk of financing and direct influence on the performance of financing. Thus, to improve the performance of Islamic micro financing with mudharabah can be done by increasing the competence of sharia account officer.
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Nkurunziza, Gideon, John Munene, Joseph Ntayi, and Will Kaberuka. "Business process reengineering in developing economies." Innovation & Management Review 16, no. 2 (May 15, 2019): 118–42. http://dx.doi.org/10.1108/inmr-03-2018-0010.
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Purpose The purpose of this paper is to study the relationship between organizational adaptability, institutional leadership and business process reengineering performance using the tested complexity theory in a developing economy setting. Design/methodology/approach This study is correlation and cross-sectional and adopts institutional-level data collected via questionnaires from reengineered microfinance institutions in Uganda. Cluster analysis as data mining technique was used to classify cases based on respondents’ opinions into homogeneous clusters. Nvivo was used to understand the perceptions of business process reengineering performance based on qualitative data. The authors used structural equation modeling to derive the predictive model of business process reengineering performance in a developing world setting. Findings The authors find that organizational adaptability and institutional leadership are key predictors of business process reengineering performance. Results reveal a predictive model of 61 per cent based on structural equation modeling for the study variables. Cluster analysis as data mining approach explored complex patterns of reengineered business processes. Research limitations/implications The use of cluster analysis is susceptible to problems associated with sampling error and absence of fit indices. However, the likelihood of these problems is reduced by the interaction with the data, practical implications and use of smart partial least square to generate structural equations based on derived measurement models of each study variable. Practical implications Policymakers of Bank of Uganda, Ministry of Finance and Economic Planning, should develop sound policies in relation to knowledge management, institutional leadership and adaptive mechanisms to enhance business process reengineering performance to take advantage of new knowledge opportunities for the improvement of their businesses. Social implications Given the results from structural equations generated, managers need to consider institutional leadership and organizational adaptability as key drivers of business process reengineering performance in microfinance institutions. The results confirm the significant role of institutional leadership, organizational adaptability in determining business process reengineering performance outcomes. Originality/value Unlike most of the business process reengineering literature, this study contributes to literature by domesticating and testing complexity theory to explain business process reengineering performance in developing economies.
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Putranto, Agus, Muhammad Trihudiyatmanto, and Muhammad Trihudiyatmanto. "The Role Of Islamic Business Ethics In The Relationship Between Adaptability And The Business Performance Of Syariah Financial Institutions." AL-ARBAH: Journal of Islamic Finance and Banking 3, no. 1 (April 30, 2021): 21–36. http://dx.doi.org/10.21580/al-arbah.2021.3.1.8079.
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Purpose - This study was to analyze how much influence adaptability has on business performance. The variables studied were independent variables consisting of adaptability variables and the dependent variable was business performance with Islamic business ethics as a moderating variable.Method - The research data were obtained from BMT Marhamah employees in Wonosobo Regency. Sampling from the population using the census sampling method. The data were collected using a survey method, namely the questionnaire was delivered and taken directly to the research object. Data analysis used the Structural Equation Modeling (SEM) test by checking the independent variables, moderating variables and dependent variables.Result - From the research that has been done, it is found that adaptability has an effect on business performance at BMT Marhamah Wonosobo. Islamic business ethics affect business performance at BMT Marhamah Wonosobo. adaptability has an effect on business performance at BMT Marhamah Wonosobo with Islamic business ethics as a moderating variable. This means that Islamic business ethics moderates the relationship between adaptability and business performance at BMT Marhamah Wonosobo.Implication - This study examines Micro Syariah Financial Institutions in Indonesia.Originality- There is a difference between theory and practice in Islamic Microfinance Institutions in Indonesia.
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Mutaqin, Muhamad, and Widiyanto Bin Mislan Cokrohadisumarto. "The Role of Network Quality as Moderating Variable on the Performance Enhancement of Islamic Microfinance Institutions (Cases of Baitul Mal Wat Tamwil)." IQTISHADIA 11, no. 2 (September 26, 2018): 307. http://dx.doi.org/10.21043/iqtishadia.v11i2.3198.
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<p>Islamic microfinance institutions (IMFI) -such as <em>Baitul Mal Wat Tamwil</em> (BMT)– have an important role in the development of micro-enterprises in Indonesia. Therefore, performance improvement BMT institutions should be carried out continuously in order to enhance its role in contributing to the development of the national economy, namely through the development of micro enterprises. The purpose of this study is to develop animprovement model the performance of BMT by involving the variables of human capital, Islamic business ethics, and moderation variable of network quality. Results of the study showed that the human capital and Islamic business ethics have a significant effect on the performance of BMT, and the network quality is able to strengthen the effect of human capital and Islamic business ethics in improving the performance of BMT. This result indicates that the network quality as moderation variable has an important role in improving the performance of BMT.</p>
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Nalukenge, Irene, Ven Tauringana, and Joseph Mpeera Ntayi. "Corporate governance and internal controls over financial reporting in Ugandan MFIs." Journal of Accounting in Emerging Economies 7, no. 3 (August 14, 2017): 294–317. http://dx.doi.org/10.1108/jaee-02-2016-0018.
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Purpose The purpose of this paper is to investigate the relationship between corporate governance and internal controls over financial reporting (ICFR) of microfinance institutions (MFIs) in Uganda. Design/methodology/approach This study was cross-sectional and correlational. In all, 70 Ugandan MFIs were surveyed and the data were analyzed using SPSS Version 20 to test the nine hypotheses which were put forward. The hypothesized relationships were tested using the ordinary least squares regression. Findings The findings based on multiple regression analysis suggest that board role performance, expertise and Association of Microfinance Institutions in Uganda (AMFIU) membership are significant predictors of the ICFR. However, board independence and separation of CEO and chairman roles are not significant predictors. The results also show that the firm-specific control variables (auditor type, size, accounting qualification and age) are also not significant. Research limitations/implications This study has limitations in that it is cross-sectional, thus limiting monitoring changes in behavior over time and also because the effectiveness of the ICFR was assessed using perceptions. Practical implications Efforts by regulators and other stakeholders to improve the ICFR must focus on the corporate governance aspects such as board expertise and ensure that the board performs its roles. Originality/value The paper adds to the existing literature on the corporate governance and ICFR by documenting the relationship between the corporate governance and ICFR. The study complements the previous studies on the ICFR by demonstrating that board expertise and board role performance improve the ICFR. Such evidence does not currently exist. The findings also indicate that an MFI which is a member of AMFIU was found to have better ICFR supporting self-regulation.
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Nawaz, Ahmad, Sana Iqbal, and Sadaf Ehsan. "Does Social Performance Drive Corporate Governance Mechanism In Case of Asian MFIs? An Issue of Endogeneity." Global Business Review 19, no. 4 (May 15, 2018): 988–1012. http://dx.doi.org/10.1177/0972150918772961.
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The current study contributes to the existing literature on the relationship between corporate governance (CG) and social performance (SP) of microfinance institutions (MFIs) by introducing CG index for the first time purely in the perspective of Asian MFIs. Moreover, this research also investigates the existence of endogeneity by checking the reverse causality between CG and SP as many previous studies highlighted the endogenous nature of many governance and performance variables. Using a panel of 173 MFIs in 18 Asian countries for the period of 5 years, a comprehensive CG index (CGI) based on seven internal governance mechanism variables is constructed as an indicator of the overall CG mechanism of MFIs. By employing generalized least squares (GLS) model, our results indicate insignificant impact of CG on many SP variables which are attributed to the endogenous nature of this relationship as the significance of results improved by studying relationship in reverse direction by employing ordered logit model. Our results indicate that SP is an important determinant of CG mechanism of MFIs even after controlling for MFI-related characteristics.
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Deb, Joyeeta. "Impact of Competition on Social Performance of MFIs: Comparative Analysis of India and Bangladesh." Vision: The Journal of Business Perspective 24, no. 2 (December 30, 2019): 160–70. http://dx.doi.org/10.1177/0972262919875536.
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Although studies encompassing the different aspect of microfinance like sustainability of microfinance institutions (MFIs), role of microfinance in poverty alleviation, etc., have enriched the literature from time to time, studies on competition and its impact on social performance of MFIs are scarce. There also exists lacking consensus as to how can competition influence MFIs’ social performance. The empirical evidence reveals duality of opinion. With information asymmetry, competition enhances borrowers’ indebtedness and lowers expected loan repayment and impeding loan quality. Furthermore, in order to overcome these problems, MFIs would engage in more screening that raises their operational costs. This encumbers the sustainability of MFIs. Thus, the socially oriented MFIs, in order to remain sustainable, start targeting the less poor borrowers. But the other view holds that as competition intensifies, it provokes the MFIs to remain committed with the social objective and to strive to retain the clients. The theory on impact of competition on the social performance of MFIs may be either positive or negative, which calls for further investigation. Against this backdrop, this article attempts to assess the impact of competition on social performance of MFIs in India and Bangladesh. The study is conducted over 53 MFIs from India and 20 MFIs from Bangladesh on which a complete set of data is available. The study period is confined to 9 years from 2009 to 2017. In order to establish the association between competition and MFIs’ social performance, panel data regression is used. The study takes into account the depth and breadth of outreach as the dependent variable. The study uses panel data regression to establish the association between competition and social performance of MFIs. The empirical analysis reveals that competition has no significant association with any of the measures of social performance. This implies that social performance in the sector is explained by other factors. Amongst the country-specific variables, it is clear from analyses that gross domestic product (GDP) and inflation are important determining factors of MFIs’ social performance. Country of origin (COO) of the MFIs is one of the determining factors for social performance as it is found to be significant for three out of the four models. It is also evident from the analyses that Bangladeshi MFIs have a greater impact on MFIs’ social performance in terms of outreach in comparison to Indian MFIs. While for percentage of female borrowers (PFB), Indian MFIs account for greater depth of outreach in comparison to Bangladesh.
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Husnurrosyidah, Husnurrosyidah. "PENGARUH PELATIHAN AKUNTANSI SYARIAH, SISTEM INFORMASI AKUNTANSI DAN PENGENDALIAN INTERNAL TERHADAP KINERJA KARYAWAN BMT KABUPATEN KUDUS." Equilibrium: Jurnal Ekonomi Syariah 6, no. 2 (December 2, 2018): 270. http://dx.doi.org/10.21043/equilibrium.v6i2.4830.
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<p><em>BMT is a sharia microfinance institution that can reach all levels of society and has the potential to develop into a professional, healthy, and sharia Islamic microfinance institution. However, based on observations in several BMTs domiciled in Kudus, Pati, Jepara and Rembang areas, it still seems that employee performance is poorly demonstrated by marketing that cannot reach the targets set by BMT, even many fictitious sales agents are very detrimental to BMT. This is due to the low internal control in the BMT. In addition, there are still many BMT employees who are professional with accounting so employees need sharia accounting training. This research is a field research with a quantitative approach. The data used are primary and secondary data with survey methods through questionnaires. There are three independent variables in this study, namely (X1) training in Islamic accounting, (X2) accounting information systems, and (X3) internal control. The dependent variable (Y) in this study is employee performance. A sample of 94 respondents, using the purposive sampling method. The results of this study indicate that: 1) sharia accounting training has an effect on employee performance indicated that the PAS direct effect coefficient on KK (path c) in model (1) is 0.12 and significant (<0.02); 2) accounting information system influences employee performance by 0.19; 3) internal control has an effect on employee performance indicated by direct effect coefficient of 0.35.</em><em></em></p>
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BOERMANS, MARTIJN A., and DAAN WILLEBRANDS. "FINANCIAL CONSTRAINTS MATTER: EMPIRICAL EVIDENCE ON BORROWING BEHAVIOR, MICROFINANCE AND FIRM PRODUCTIVITY." Journal of Developmental Entrepreneurship 23, no. 02 (June 2018): 1850008. http://dx.doi.org/10.1142/s1084946718500085.
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This paper examines the effect of financial constraints on firm performance using a sample of small business owners who are clients at a microfinance institution (MFI). In developing countries, a lack of access to finance is seen as a key obstacle to successful entrepreneurship and economic growth. However, empirical evidence on this is still fragmented and sparse. This study contributes to the literature by applying an alternative measure of financial constraints based on actual lending and borrowing behavior to test how borrowing affects firm productivity. We use survey data of 615 entrepreneurs from Tanzania to analyze the relationship between financial constraints and labor productivity. Using OLS regression and propensity score matching techniques the results show that financial constraints impede labor productivity and are important barriers to successful entrepreneurship. Further tests suggest financial constraints matter regardless of the measurement method used, thereby comforting researchers in a fragmented field that applies a wide range of financial constraints variables.
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Dutta, Pinky, and Debabrata Das. "Indian MFI at crossroads: sustainability perspective." Corporate Governance 14, no. 5 (September 30, 2014): 728–48. http://dx.doi.org/10.1108/cg-09-2014-0112.
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Purpose – The purpose of this paper is to examine the factors affecting the financial sustainability of the Indian Micro Finance Institutions (MFIs) post-Andhra Pradesh (AP) crisis Design/methodology/approach – Regression analysis is used to test the significance of the independent variables on the variable of interest, i.e. the operational self-sustainability. Three-stage regression analysis, i.e. Partial F-test, residual analysis and Box–Cox-type transformations is applied to see the impact of the variables on financial sustainability of the Indian MFIs. The study is based on the data of the Indian MFIs during three fiscal years from 2010-2011 to 2012-2012 reported in the Microfinance Information Exchange (MIX). Findings – The authors’ results indicate that in 2010-2011, the linear regression model seems to be good fit to the data, whereas in 2011-2012 and 2012-2013, the appropriateness of the linear regression models seems questionable (the error distribution seems to be skewed). It is observed that square root of the dependent variable exhibits adequate fit for 2011 and 2012. Therefore, a substantial change in the model for estimating sustainability of Indian MFIs is observed in the post-AP crisis era. It is observed that portfolio quality and capital management are important determinants for the financial sustainability of the MFIs. Practical implications – This study identifies the factors affecting the sustainability of the Indian MFIs, especially after the reforms following the AP crisis in India. The study suggests that from 2012-2013, the factors such as write-off ratio, capital-to-asset ratio, ratio of financial revenue to assets and provision for loan impairment-to-asset ratio are the main factors which have significant impact on the operational self-sufficiency (OSS) of Indian MFIs. This indicates that the quality of portfolio must be improved to reduce the vulnerability of the Indian MFIs. Social implications – After the AP crisis, the performance of Indian MFIs is stabilized to a greater extent. The various performance indicators are improving. Originality/value – The paper provides a detailed comparative analysis of the factors effecting financial sustainability of the Indian MFIs, before and after the regulatory reforms in 2011. A substantial change is observed after 2011-2012. Such a study on the Indian microfinance sector seems to be new (to the best of the authors’ knowledge).
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Sukmana, Adi Angga, and Sri Mulyati. "Penilaian Kesehatan KJKS BMT Binamas." JURNAL AKUNTANSI DAN KEUANGAN ISLAM 3, no. 2 (March 6, 2019): 125–44. http://dx.doi.org/10.35836/jakis.v3i2.33.
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The analysis conducted will interpret ratios or financial data and its implications. Thisresearch is compiled to analyze health assessment KJKS BMT Binamas years 2012-2014 using a standard assessment of the Regulation of the Minister of State forCooperatives and SMEs RI Number: 35.3 / Per / M.KUKM / X / 2007 on guidelinesfor a health assessment KJKS and UJKS Cooperative. The results of this study will betaken into consideration in the evaluation and a policy for BMT KJKS Binamas toimprove their business performance so that stability is maintained and is expected toenhance public trust in this Islamic Microfinance Institutions. The approach used inthis study is a quantitative and descriptive variables used are capital; asset quality;management; efficiency; liquidity; independence and growth; the identity of thecooperative; and compliance with Islamic principles. Based on analysis of the healthassessment KJKS BMT Binamas can be seen that score recapitulation of eightvariables in 2012 amounted to 74.92% so that it can be categorized fairly sound, andin 2013 increased to 74.92% with the category Fairly Healthy, later in 2014 slightlydecreased to 75.95% are still in the category of Fit. Value ratios consistently ratedhigh happens because KJKS continue to maintain sound operational
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Muriithi, Anne Wambui, and Paul Waithaka. "People Analytics and Performance of Deposit-Taking Micro Finance Institutions in Nyeri County, Kenya." International Journal of Current Aspects 3, no. V (October 28, 2019): 186–209. http://dx.doi.org/10.35942/ijcab.v3iv.70.
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People analytics is a data-driven approach to improving people-related decisions for advancing both individual and organizational success. While people have always been critical to the success of organizations, many business leaders still make key decisions about their workforce based on intuition, experience, advice, and guesswork. However, today leaders can improve their people decision-making based on the collection and systematic analysis of data. A closer look at the operations of many deposit taking micro-finance institutions reveals that they all face challenges related to human resources management. These firms invest in human development, only for the human capital to leave for greener pastures within a short period, impacting negatively and heavily on performance, survival and growth. It is therefore imperative that they undertake serious human resource evaluation, and people analytics can be a crucial tool for the success of this process. The aim of the study was thus to evaluate the effect of people analytics on the performance of Deposit Taking Micro Finance Institutions in Nyeri County, Kenya. The specific objectives guiding the study were: to determine the influence of technology adoption on the performance of deposit taking micro-finance institutions, effect of human resource data access on the performance of deposit taking micro-finance institutions, effect of data management capacity on the performance of deposit taking micro-finance institutions, and the effect of stewardship for people analytics on the performance of deposit taking micro-finance institutions in Nyeri County, Kenya. The study adopted the descriptive research design while targeting173 respondents comprising 8 human resource managers and 165 staff in the human resource department of 8 registered deposit taking micro-finance institutions in Nyeri County. Through stratified sampling method, all managers (8) and 30% (50) of the 165 staff comprised the sample size of 58 respondents. The selected respondents were considered key informants in the study area. Data was collected from primary sources using a semi-structured questionnaire. Data was analyzed with the aid of Statistical Package for Social Studies and excel computer software through descriptive (percentages, means, standard deviation), as well as inferential statistical methods (correlation and regression techniques). Tables and graphs were used for data presentation. Results showed that the micro finance institutions had established infrastructure for the application of technology. Descriptive and inferential analysis results indicated that technology adoption, human resource data access, data management and stewardship had a positive relationship with the performance of MFIs. Findings further indicated that out of the four independent variables, only three were significant: human resource data access, data management and stewardship. The study thus concluded that HR data access, data management and stewardship aspects of people analytics had significant effect on the performance of Microfinance Institutions. Technology adoption lowly affected people analytics and performance of micro finance institutions. To enhance data access and management, the study recommended that managers need to invest in new apps that are platforms for people analytics including cloud computing and artificial intelligence. They must also re-evaluate the techniques for human resource anaytics as well as capacity development in people analytics for managers and staff.
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Blanco-Oliver, Antonio, Rafael Pino-Mejías, and Juan Lara-Rubio. "Modeling the Financial Distress of Microenterprise Start- Ups Using Support Vector Machines: A Case Study." Innovar 24, no. 1Spe (February 1, 2014): 153–68. http://dx.doi.org/10.15446/innovar.v24n1spe.47615.
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Despite the leading role that micro-entrepreneurship plays in economic development, and the high failure rate of microenterprise start-ups in their early years, very few studies have designed financial distress models to detect the financial problems of micro-entrepreneurs. Moreover, due to a lack of research, nothing is known about whether non-financial information and non-parametric statistical techniques improve the predictive capacity of these models. Therefore, this paper provides an innovative financial distress model specifically designed for microenterprise startups via support vector machines (SVMs) that employs financial, non-financial, and macroeconomic variables. Based on a sample of almost 5,500 micro-entrepreneurs from a Peruvian Microfinance Institution (MFI), our findings show that the introduction of non-financial information related to the zone in which the entrepreneurs live and situate their business, the duration of the MFI-entrepre-neur relationship, the number of loans granted by the MFI in the last year, the loan destination, and the opinion of experts on the probability that microenterprise start-ups may experience financial problems, significantly increases the accuracy performance of our financial distress model. Furthermore, the results reveal that the models that use SVMs outperform those which employ traditional logistic regression (LR) analysis.
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Daher, Lâma, and Erwan Le Saout. "Performance of Listed Microfinance Institutions." Strategic Change 26, no. 2 (March 2017): 145–58. http://dx.doi.org/10.1002/jsc.2117.
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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 (November 6, 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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Le Saout, Erwan. "Performance of the Microfinance Investment Vehicles." Applied Economics and Finance 4, no. 6 (October 23, 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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Shettima, Usman, and Nazam Dzolkarnaini. "Board characteristics and microfinance institutions’ performance." Journal of Accounting in Emerging Economies 8, no. 3 (August 13, 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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Mersland, Roy, and R. Øystein Strøm. "Performance and governance in microfinance institutions." Journal of Banking & Finance 33, no. 4 (April 2009): 662–69. http://dx.doi.org/10.1016/j.jbankfin.2008.11.009.
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Ahmad, Rashid, Altaf Hussain, Muhammad Umer, and Kishwar Parveen. "Efficiency of Microfinance providers in Pakistan: An Empirical Investigation." Review of Economics and Development Studies 3, no. 2 (June 30, 2017): 147–58. http://dx.doi.org/10.26710/reads.v3i2.173.
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Purpose: The aim of this study is to assess the efficiency of microfinance institutions in Pakistan using quarterly data from microfinance connect of second quarter of 2006 and second quarter of 2016 for comparison of two different time span. To estimate efficiency of microfinance institutions in Pakistan, the Data Envelopment Analysis are employee. Out of 52 microfinance providers in Pakistan, only 15 microfinance institutions is sample across the industry based on profile of gross loan portfolio of each microfinance provider. to estimate the efficiency of microfinance providers in Pakistan (i.e. constant returns to scale, variable returns to scale and scale efficiency), Malmquist productivity Index and total factor productivity of the microfinance institutions, two input variables(loan amount disbursed, total staff) and output variables (gross loan portfolio and number of active borrowers) are used. The results of the study conclude that MFIs in Pakistan are working below their optimum scales measurements and only one microfinance provider (Khushali Bank) out of 15 in our sample in 2007 and (Thardeep rural support program) in 2016 works on efficient frontier and while others are inefficient. It recommended that the institutions should increase loan amount disbursed and invest resources to the train their staff. Moreover, microfinance providers should expand by increasing number of offices to assist community.
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Nkundabanyanga, Stephen Korutaro, Brendah Akankunda, Irene Nalukenge, and Immaculate Tusiime. "The impact of financial management practices and competitive advantage on the loan performance of MFIs." International Journal of Social Economics 44, no. 1 (January 9, 2017): 114–31. http://dx.doi.org/10.1108/ijse-05-2014-0104.
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Purpose The purpose of this paper is to study the impact of financial management practices and competitive advantage on loan performance of microfinance institutions (MFIs). Design/methodology/approach In this cross-sectional study, the authors surveyed 70 MFIs in Kampala, Uganda. The authors applied principal component analysis to reduce the number of factors and identify the important elements that capture financial management practices, competitive advantage and loan performance of MFIs. The authors put forward and tested three hypotheses relating to the significance of the relationship between these three variables of MFIs using the statistical software package, SPSS and also apply the normal theory approach developed by Sobel (1982) and Baron and Kenny (1986) in testing the mediation by competitive advantage. Findings Robust financial management practices are associated with better loan performance of MFIs. Results also reveal a significant positive relationship between the competitive advantage of the MFIs and their loan performance. Furthermore, a significant positive relationship between competitive advantage and loan performance is found. Moreover results also show a full mediation effect of competitive advantage on the association of financial management practices and loan performance, implying that the association of financial management practices of the MFIs on their loan performance is entirely through their competitive advantage. Research limitations/implications Although there is plenty of literature on loan performance, financial management practices and competitive advantage, there is scarce literature on their effective conceptualization. This together with the imprecise definition of competitive advantage may have affected conceptualization of the authors study. Thus, in this study, the authors do not claim highly refined measurement concepts. Moreover, many of the extant studies for instance have measured loan performance quantitatively, yet process factors which are inherently qualitative in nature can better explain variances in loan performance concept. More research is therefore needed to better refine qualitative concepts used in this study. Practical implications Efforts by the MFIs management to improve loan performance must be matched with adoption of financial management practices that provide MFIs with sustained competitive advantage over their rivals. Originality/value In order to explain loan performance of MFIs, and drawing from social economics, management and accounting strands, this study shows that assessing the role of competitive advantage in the relationship between financial management practices and loan performance is imperative. Also, many of the extant studies have measured loan performance quantitatively, yet process factors or antecedents which are inherently qualitative in nature can better explain variances in loan performance concept. Thus this study calls for the refinement of loan performance concept and accounting for endogeneity.
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Anglin, Aaron H., Jeremy C. Short, David J. Ketchen, Thomas H. Allison, and Aaron F. McKenny. "Third-Party Signals in Crowdfunded Microfinance: The Role of Microfinance Institutions." Entrepreneurship Theory and Practice 44, no. 4 (April 12, 2019): 623–44. http://dx.doi.org/10.1177/1042258719839709.
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Crowdfunded microfinance research has routinely examined how campaign characteristics drive funding to crowdfunding campaigns but has neglected to examine the critical role of the microfinance institution (MFI). We leverage signaling theory to contend that entrepreneurs’ MFI affiliation is a salient third-party signal that shapes the performance of their crowdfunding campaign and examine how the financial and social performance of MFIs drive campaign funding. Our examination of 220,649 loans paired 173 MFIs supports our arguments. We provide insight into the importance of third-party signals in crowdfunding and into how investors seek to balance social motives with financial concerns in crowdfunded microfinance.
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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 (December 14, 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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Nkundabanyanga, Stephen Korutaro, Julius Opiso, Waswa Balunywa, and Isaac Nabeeta Nkote. "Financial service outreach correlates." International Journal of Social Economics 42, no. 4 (April 13, 2015): 404–20. http://dx.doi.org/10.1108/ijse-10-2013-0241.
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Purpose – The purpose of this paper is to establish the relationship between managerial competence, managerial risk-taking behaviour and financial service outreach of microfinance institutions (MFIs). Design/methodology/approach – In this cross-sectional and correlational study, the authors surveyed 52 branches of MFIs from a population of 60 branches of 20 MFIs in eastern Uganda. Two respondents, a branch manager and a senior loan officer, were the units of enquiry for each branch. The authors put forward and tested four hypotheses relating to the significance of the relationship between perceived managerial competence, risk-taking behaviour and financial service outreach using SPSS version 20. The authors established the hypothesized relationships using Pearson correlation coefficients and obtain a mediating effect of risk-taking behaviour using partial corrections and regression analysis. Findings – The results suggest positive and significant relationships between perceived managerial competence, risk-taking behaviour and financial service outreach. However, while the direct relationship between managerial competence and financial service outreach without the mediation effect of risk-taking behaviour of managers was found to be significant, its magnitude reduces when mediation of risk-taking behaviour is allowed. Thus the entire effect does not only go through managerial competence but majorly also, through risk-taking behaviour of managers. Research limitations/implications – This study did not control for environmental factors such as laws and regulations. As such the model may have been under fitted. Nevertheless, the study has introduced a clearer understanding that outreach performance in MFIs rests with competent managers in strategic positions operating in synergy with their risk-taking behaviour. The study informs policy makers that outreach performance of the MFIs depends on the quality of the competence managers have in addition to their risk-taking propensities. Practical implications – Efforts by the stakeholders to improve financial service outreach must be matched with appropriate competences and risk-taking behaviour of managers. Originality/value – The results contribute to extant literature by investigating two explanatory variables for financial service outreach and provide initial evidence of the mediating effect of intrinsic high risk-taking behaviour of managers. Results add to the conceptual improvement in risk-taking behaviour and lend considerable support for the behavioural perspective in the study of financial service outreach of MFIs.
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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 (October 1, 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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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