Microfinance Companies Research Articles

Analysis of Psychological Capital to Measure Labor Commitment: The Case of Latin American Microfinance Companies

Analysis of Psychological Capital to Measure Labor Commitment: The Case of Latin American Microfinance Companies

The Effects of Dividend Policy On the Price of Shares of Microfinance Companies In Developing Countries

The strategy of dividend policy implementation in the context of business value growth is the subject of debates in theoretical and empirical research. Dividends and retained earnings are two alternatives that investors have when deciding how to distribute their income. According to the bird-in-the-hand theory, a company’s value is maximized by paying large dividends, because investors consider the payouts less risky than capital gains, regular high dividend payments serve as an information signal to market participations about the current and future financial stability, which attracts new investors and allows attracting more external resources. Instead, according to Miller and Modigliani’s dividend irrelevancy theory, corporate value is influenced not by the division of income into dividends and retained earnings, but by investment policy and income from assets. There is a lack of research in the literature that examines the relationship between dividend payouts and stock prices in developing countries (especially in Nepal) and there is no empirical evidence that profitability can moderate this relationship. The article examines the influence of dividend yield, retention ratio and dividend payout ratio on share price both in general and directly, and indirectly-through return on assets and return on equity. The information base is data for the 2017-2021 financial years on 61 Nepalese microfinance institutions (10 of which were the direct object of the study) registered on the Nepal Stock Exchange (NEPSE), obtained from the official websites of the relevant institutions, ShareSansar and NEPSE statistics. SPSS software (PROCESS v4.3) was used for data analysis. Descriptive statistics, the correlation and regression analysis were used for the analysis. The article analyzes three types of effects: total, direct and indirect. The overall effect of dividend yield on share price is negative, the retention ratio is positive and significant, and the dividend payout ratio is negative and significant. The direct effect of the dividend yield on the stock price is negative, the retention ratio and the dividend payout ratio are positive and insignificant. The indirect effect of dividend yield and retention ratio on share price through return on assets is negative and insignificant, and through return on equity it is positive and significant. The indirect effect of the dividend payout ratio through the return on assets is positive and significant. However, the return on shareholders’ capital has a negative and insignificant effect on the share price.

Quest on Determinants of Stock Price in Nepal: Evidence of Microfinance Sector Share Listed in NEPSE

Stock markets are crucial for economic prosperity, capital formation, and sustainable economic growth. It facilitates resource flow, investment opportunities, pooling funds, sharing risk, and wealth transfer between savers and users. This paper investigates the determinants of stock price traded in Nepal's secondary market through NEPSE, focusing on the microfinance sector. The study uses descriptive, analytical, and inferential research to analyze the determinants of microfinance companies' market prices. The econometric model's coefficient of variation value is 0.90, indicating that 90 per cent change in the market price of the microfinance company is defined by the explanatory variables included in the model. Market price per share is positively correlated with earnings per share, return on equity, price-earnings ratio, and book value, while inversely correlated with floating share size. Independent variables like earnings per share, price-to-earnings ratio, and floating shares are statistically significant. However, other fundamental aspects of equity, such as book value per share and return on equity, are not statistically significant. This highlights the importance of considering company-specific factors in investment decisions in Nepalese capital markets. In conclusion, there is serious gap of financial literacy from the part of vast majority of market participant lacking investment optimization.

Impact of NPA on profitability in microfinance industry of India: A comparative study on some selected microfinance companies

Impact of NPA on profitability in microfinance industry of India: A comparative study on some selected microfinance companies

Examining the Impact of Dividends on Share Prices: Evidence from Microfinance Companies in Nepal

The objective of this empirical study is to investigate how dividends affect stock prices. The antecedent variables are the price-to-earnings ratio, dividend payout ratio, dividend per share, and earnings per share. The consequent variable is the share price of microfinance companies. Profitability (return on equity) acts as a mediator between the antecedent and consequent variables. Microfinance was chosen on the basis of its performance on the Nepal stock exchange, and information was gathered from companies listed in the NEPSE between 2018 and 2022. Purposive or judgmental sampling was utilized to identify the ten microfinance companies that served as study samples. The research employs descriptive statistics, correlation, and regression path analysis models to investigate the mediating role. The findings revealed that the direct and total effects of the dividend payout ratio and earnings per share have insignificant impacts on the share price. Furthermore, the indirect effect of antecedent variables has an insignificant impact on share price through return on equity. Additionally, this study advises investors to use the information not only as a way to profit but also as a tool for assessing companies from an investment standpoint. Moreover, management must determine the dividend payout ratio to enhance shareholder wealth.

Impact of Financial Performance on Stock Price Volatility: A Case of Nepalese Microfinance Companies

With the explanatory variables of ROE, ROA, D/P ratio, P/E ratio, and BVPS, this study investigates the impact of financial performance on the stock price instability of microfinance companies listed on the Nepal Stock Exchange (NEPSE). The age and size of microfinance companies have been used as control variables. It has also observed the investor's behavior toward these variables. The study follows a quantitative approach with descriptive, causal-comparative, and survey research design. Multiple regression analysis is used to examine the causal relation between stock price volatility and the profitability of microfinance companies. This study has analyzed the annual report of 31 microfinance companies with 183 observations and 121 responses to a questionnaire received from the investors. According to this study, microfinance organizations' capacity to produce profits has a considerable impact on share price volatility. The survey result of the study reveals that the investors of microfinance companies are more sensible towards earning ability and past performance of the companies. The results of this investigation may be beneficial to the investors of microfinance companies to select the companies for investment. Acknowledging the limitation of data used in this study, further study can be conducted by taking other industries like banking, insurance, hotel, and manufacturing companies listed in the NEPSE. Besides this, a behavioral study about investors’ responses toward market factors can be conducted by taking a large sample of investors.

The Determinants of FinTech Implementation in Microfinance Companies – A Systematic Literature Review

As financial technology continues to disrupt and reshape the financial industry, there is a growing body of work investigating how it can be harnessed to improve access to basic financial services and promote financial inclusion for individuals at the lower tier of the economic pyramid. In the context of microfinance companies, there has been limited exploration into the key determinants influencing the successful implementation of digital finance products and services. This research aims to explore the potential role of financial technology in supporting the sustainability, growth, and advancement of microfinance companies by identifying the internal and external determinants that impact the fintech decision-making process. To achieve this, a systematic review was conducted, thoroughly examining relevant publications indexed in the Web of Science database. The review process involved a „coding scheme” (content analysis) to extract essential concepts from the primary publications. The research findings highlight the significance of various determinants related to social, economic, organizational, and technological dynamics in driving the implementation of digital finance solutions. Based on these results, a comprehensive model is proposed, illustrating the interplay among the three potential domains identified in the context of this review.

EVALUATING THE IMPACT OF MARKETING COMMUNICATION MIX ON CUSTOMER SATISFACTION: THE MEDIATING ROLE OF SERVICE QUALITY DELIVERY

Customers are important stakeholders in the financial industry, and therefore management must place a high priority on their satisfaction. In this paper, we investigated the impact of marketing communication mix on customer satisfaction being mediated by service quality within the financial industry. Data was drawn from marketing and sales managers of financial institutions, non-financial institutions, and microfinance companies. A sample of 372 marketing and sales managers participated in this study from financial, non-financial, and microfinance institutions across the three business regions in Ghana. The study deployed the quantitative approach to achieve the objective set. Partial Least Square-Structural Equational Modeling version 3.3 was adopted in this study to analyze the data and its processing. Out of the eleven hypotheses formulated, seven of them were significant, while four were insignificant. According to the findings, firms with greater levels of marketing communication mix should employ this performance metric to attract and achieve high-quality customer satisfaction because customer satisfaction is critical to a company's success. To management, it set a ground for them as superintendents of businesses to tailor-make their products in line with the customers’ preferences and satisfaction. The limitations and future research directions are equally presented in the paper.

Effect of Credit Management Systems on Loan Recovery Efforts of Microfinance Banks in Akwa Ibom State

This study set out to ascertain the effect of credit management techniques on loan recovery efforts by microfinance banks. To guide the study, 3 objectives specific objectives, 3 research questions and three null hypotheses tested at 0.05 alpha levels were formulated. The study covers all microfinance companies operating in Akwa Ibom State. A descriptive survey research design was employed for the study. The population was 85 operations and marketers in microfinance banks in Akwa Ibom State that have been in existence from 2014 to 2017. The sample size was 60 and the stratified random sampling technique was employed. The research instrument used for the study was a researcher- made questionnaire tagged “Credit Management and Loan Recovery Questionnaire” (CMLRQ). The instrument developed by the researcher was face and content validated by three experts in the Faculty of Social sciences, Akwa Ibom State University. All corrections and inputs were built in to the final version of the instrument. The reliability coefficient of the instrument was determined using Cronbach alpha method after the instrument was trial-tested on 20 respondents who were part of the population but not part of the sample. The result showed reliability co-efficient of 0.78. The data generated was analyzed using regression analysis to answer the research questions and to test the null hypotheses at .05 alpha level. It was concluded that Credit appraisal, credit risk control and collection policy were found to be very important in influencing loan recovery. It was recommended among others that Microfinance banks should ensure that credit appraisal is carried out by the technical people who are experienced and competent credit officer in order to stem out those with intolerable credit risk at the earliest possible opportunity.

Empirical Test of Credit Risk Assessment of Microfinance Companies Based on BP Neural Network

In recent years, the chaos of internet finance has occurred frequently, especially P2P, with high risks. As a kind of financial innovation, small loan companies are challenging to avoid alone, and the issue of credit risk is also highly valued. This study selects the loan records of a small loan company (a daily loan record from September 1, 2016 to July 1, 2021 has seven indicators, each of which has 21299 data). It uses MATLAB programming to test the correctness of risk indicator selection and the accuracy of BP neural network classification and identification results. This study obtains the corresponding risk value. According to the corresponding risk value, the newly applied loans are classified, that is, rated, to verify the effectiveness and applicability of this method. Therefore, BP neural network has strong applicability, generalization ability, and portability and is an effective method for small loan companies to guide credit risk assessment.

Impact of Firm-specific Factors on the Financial Performance of Nepalese Microfinance Institutions

Background: Microfinance institutions (MFIs) are established with the aim of providing an opportunity to financially deprived people to make them financially independent and come out of poverty. To provide financial assistance to the targeted people, MFI must be able to improve their financial performance. Thus, the financial manager of MFI needs to identify the major factors that influence their financial performance. Objectives: This paper aims to analyze the impact of firm-specific factors on the financial performance of Nepalese Microfinance Institutions (MFIs. Methods: This paper has applied descriptive and causal comparative research design. The annual panel data of 29 microfinance companies listed in the Nepal stock exchange for the period of 2010/11 to 2020/21 has been used. To identify the impact of firm-specific factors on the financial performance of Nepalese MFIs, an appropriate multivariate regression model is selected based on the result of the Breusch and Pagan Lagrangian multiplier test and the Hausman test. Results: Using the fixed effect regression model, this paper found the significant influence of firm-specific factors on the financial performance of Nepalese MFIs. Further, this study found a significant positive impact on deposit ratio, management efficiency, and weighted average interest rate spread and a significant negative impact of asset quality on the financial performance of Nepalese MFIs. Conclusion: This paper concluded that the financial performance of Nepalese MFIs could can be improved by increasing the deposit ratio, management efficiency, and weighted average interest rate spread. On the other hand, the study also concluded that Nepalese MFIs should maintain a lower level of non-performing loans to achieve a higher level of financial performance.

The improvement of microfinance institution under inclusive finance: A case of Grameen Bank of China

In the rapid development of modern society, microfinance companies are an inevitable product of the economic market demand, and microfinance companies are bound by the relevant laws of China and enjoy the policy support of the state. As an effective supplement to traditional banking financial institutions, microfinance companies, with their flexible mechanisms and efficient services, are increasingly becoming an important force in achieving the goal of financial inclusion. However, due to the lack of supervision, shortage of capital, and excessive risks, microfinance companies have also been deviating from the original purpose of inclusive financial services, such as "non-farming" and "centralization" of loans. The emergence of the Grameen Bank in the 19th century - a "bank for the poor" - broke the original concept. It will be the case study for analysis in this paper. Using the case of Grameen Bank, this paper aims to explore the characteristics and advantages of small lending institutions, analyze whether they are replicable, sustainable and the social significance their existence brings, and make recommendations and prospects for promoting a greater role of microfinance companies in financial inclusion.

Effect of gender participation on determining the maturity of crossed-due loans: Evidence from microfinance companies of Nepal

The impact of gender participation on the maturity of crossed-due loans is observed in this study. Furthermore, the associations between maturity of crossed-due loans, their number, and loan issued on physical collateral and collective bail are also monitored using the unbalanced panel data of thirty microfinance companies. The study investigates the short- and long-term link between response and predictor variables. It is founded on an exploratory and descriptive research design. The Hausman test, fixed effect or LSDV model, Pedroni and Kao co-integration test are used to observe the relation and impact. The maturity crossed due loan number, total loan amount, loan issued against physical collateral, and loan allocated on collective bail are jointly significant to determine the maturity of crossed due loan amount of microfinance companies of Nepal. It is found that women are more conscientious in repaying loans on time compared to male borrowers. Per rupee 0.382 rupees, a maturity crossed due loan is found in microfinance companies where only women can borrow, but per rupee 0.404 rupees, a time crossed due loan is found where men and women can borrow. Policymakers of banks are not necessarily hesitant to provide loans to female borrowers.

Microfinance Companies in India Are not at All a Blessing, It Is Rather a Big Curse: It Should Be Stopped Immediately by Law

Microfinance Companies in India Are not at All a Blessing, It Is Rather a Big Curse: It Should Be Stopped Immediately by Law

Covid -19 Pandemic in India and Impact of Microfinance Companies and Non Financial Banking Companies Microcredit Loans to Poor's Households through the Self Help Groups (SHG) in West Bengal State and also in India

Covid -19 Pandemic in India and Impact of Microfinance Companies and Non Financial Banking Companies Microcredit Loans to Poor's Households through the Self Help Groups (SHG) in West Bengal State and also in India

Microfinance Management of Indian Companies

History of microfinance can be traced back to the middle of 1800s when the theorist Lysander Spooner was writing of about benefits of small credits to entrepreneurs. It is the source of financial services to small scale business lacking access to banking and related services. Microfinance refers to a variety of financial services that target low-income clients particularly women since the clients of microfinance companies (MFCs) have lower incomes and often have limited access to other financial services, microfinance products tend to be for smaller monetary amount than traditional financial services. These services include loans, savings, insurance and remittance. Microfinance loans are given for variety of purposes frequently for microenterprise development. This also reflects in diversity of products and services offered. Because of varied needs and because of the industry’s focus on the poor, microfinance often use nontraditional methodologies such as group lending or other forms of collateral securities not employed by the formal financial sector.

Analysis of the Awareness of Microfinance in Developing Economies and its Impact

Civilising human society and improving the living standard, mitigating the poverty level is a highly crucial requirement. This study is focusing on understanding the development of awareness of microfinance in developing economies. Sustainable financing is one of the roles of microfinancing which is capable of enabling financial innovation and preventing poverty. The system of microfinance helps to balance the difference between poverty and rich people in society. Microfinance companies provide small amounts of loans to the people who make them able to start small businesses but sometimes that is also not possible. High interest rates of small amounts of loans is a limitation of microfinance and a lot of people still avoid accepting loans from microfinance companies. Thus, financial services of the microfinance companies are not improved and that can enhance difficulties for the borrowers to understand the procedures properly which is another challenge. In this study “secondary data” has been used to generate a valuable and reliable outcome to draw the conclusion. Thus, effective research tools have helped the researcher to set the path of research and get the right information related to the research topic. All the research elements have made the study valuable to sustain for a long-term issue. Moreover, this study can help the readers to understand the impact of microfinancing to sustain economic growth. Keywords : Awareness, development, economy, microfinance.

Особенности микрокредитования субъектов малого и среднего предпринимательства на региональном уровне

Representatives of small and medium-sized businesses make a significant contribution to the regional economy, thereby ensuring the rhythmic development of the national economy. The state systematically carries out various measures to support small and medium-sized businesses, including implementing concessional microcredit programs. The purpose of the study was to assess the scale and quality of the implementation of the «Program of concessional lending to small and medium-sized businesses» at the regional level – in the Bryansk region. The authors analyzed the dynamics and structure of the portfolio of concessional loans issued to small and medium-sized economic entities in 2019-2022. state microfinance organizations. Factors affecting the effectiveness of lending technologies and support for small and medium-sized businesses in the Bryansk region were analyzed, weaknesses were identified and ways to optimize the process of preferential lending to small and medium-sized businesses were proposed. The recommended measures should be implemented at both the national and regional levels. It is proposed to allow microfinance companies to engage in other activities (production, trade) to increase the ability to issue preferential loans due to profits received from additional activities (national level). Regions should improve the awareness of entrepreneurs and receive feedback on concessional microcredit programs.

Microfinance Companies on Entrepreneurship Development in Nepal

This is survey based article. It is conducted with different microfinances institutions (MFIs) that branches are located in Bharatpur, Chitwan and Gaidakot, Nawalparasi. Respondents are 120 micro-entrepreneurs and 20 employees of the same MFIs are taken as respondents. Data and information are collected through questionnaires and interview. The questionnaires are distributed among the 120 sample micro-entrepreneurs and 20 employees of MFIs. The relationship between MFIs and entrepreneurships are analyzed through the use of chi square test. The article concluded that MFIs play significant role in enhance micro-enterprises operation. The study concluded that there are various barriers impede entrepreneurs’ development. The major challenges involve negligence of government for the entrepreneurship development and lack of finance for the proper development of the enterprises. Poor financial literacy, poor management of market area and the lack of infrastructure development are also the challenges. Other factors that hindered enterprises growth that was cited by entrepreneurs: Interest rates charged are too high, rigid payment period; local market is not well diversified, high competition among the local entrepreneurs, no support from the local municipality. Despite the various problems and challenges, MFIs have a positive impact on the entrepreneurship development in overall study.

Financial Management of Microfinance Companies in India

Abstract: History of microfinance can be traced back to the middle of 1800s when the theorist Lysander Spooner was writing of about benefits of small credits to entrepreneurs. It is the source of financial services to small scale business lacking access to banking and related services. Microfinance refers to a variety of financial services that target low-income clients particularly women since the clients of microfinance companies (MFCs) have lower incomes and often have limited access to other financial services, microfinance products tend to be for smaller monetary amount than traditional financial services. These services include loans, savings, insurance and remittance. Microfinance loans are given for variety of purposes frequently for microenterprise development. This also reflects in diversity of products and services offered. Because of varied needs and because of the industry’s focus on the poor, microfinance often use nontraditional methodologies such as group lending or other forms of collateral securities not employed by the formal financial sector. Keywords: Microfinance, Financial Management, JLG, SHGs.