Performance Of Microfinance Institutions Research Articles

Resource Allocation and Performance of Microfinance Institutions in Machakos County, Kenya

This research study sought to determine the impact of resource allocation on the performance of MFIs in Machakos County. The study adopted a descriptive research design. The target population for the study included 63 staff members from the 21 registered MFIs in the county. The study utilized a purposive sampling technique in an effort to identify the most suited respondents for the study. A structured questionnaire was utilized as the data collection tool. The questionnaire was divided into two parts containing the demographic data relating to the respondent's background as part one and the second part covering resource allocation. The questionnaire was structured with a 5-point Likert scale. Descriptive and Inferential statistics were used in the analysis of the data. The linear regression analysis method was used to assess the associations between resource allocation and performance. The study established that resource allocation positively influenced the performance of MFIs in Machakos County. The study concluded that the manner in which resources are allocated significantly affects the performance of microfinance institutions in Machakos County. The study recommends that policymakers and microfinance institution (MFI) leaders should prioritize developing clear guidelines and frameworks for efficient resource allocation

Factors Affecting Work Efficiency’sEmployee ofChampalao Deposit Taking Micro Finance Institution

This Researchaimedto study the motivation, efficiency in the operation of microfinance institution employees who receive deposits in Lao Pagoda and the factors that affect the performance of employees of microfinance institutions who receive deposits in Lao Pagoda.By using 50 sets of questionnaires to collect data from 50 target groups and the program SPSS software was used to analyze all the data. The research results found that the employee's work motivation is the motivation to monitor and evaluate the performance frequently with the value of X̅= 4.47;SD=0.46, job responsibility is appropriate with value X̅= 4.23;SD=0.57, types ofwork has a value of X̅= 4.07;SD=0.58, Work improvement has value X̅= 4.02;SD=0.72 and acceptance of each other within the organization staff has a value of X̅= 4.01;SD=0.64.There is also a good relationship between colleagues with a value of X̅= 4.22;SD=0.56, the level of productivityin the work function, value X̅= 4.14;SD= 0.60, policy and organizational management has a value of X̅= 4.01;SD= 0.65, working environment value X̅= 3.96 ;SD= 0.71 and lastly labor cost and welfare value X̅= 3.73;SD=0.73. The efficiency in the performance of the employee's work wasin a highlevels, such as good time management with a value of X̅= 4.37;SD= 0.53,the quality of work performed X̅= 4.31;SD= 0.48, in terms of the amount of work that can be done, the value of X̅= 4.03;SD=0.54. Factors that affect the performance of microfinance institutions that accept deposits inLaos have only one factor such asjobstability (X10) with a statistical significance level of 0.01.

Do Client Protection Principles Matter for the Economic and Social Performance of Microfinance Institutions?

Do Client Protection Principles Matter for the Economic and Social Performance of Microfinance Institutions?

Determinants of loan repayment performance: A study of microfinance institutions in Nepal

The study’s main goal is to empirically examine the association between loan repayment performance among microfinance institutions (MFIs) in Nepal regarding institutional characteristics (ICs), client characteristics (CCs), and loan characteristics (LCs). Further, the study emphasizes a causal relationship between the variables that directly corresponds with the regression research model for organic validity. For this, the researcher has chosen twenty Nepalese microfinance institutions along with 217 respondents for the study, respectively. The study found that institutional factors, client characteristics, and loan characteristics were positively and significantly associated with the loan repayment performance of Nepalese MFIs. The above-mentioned variables remain pivotal to determining the loan repayment performance of Nepalese MFIs, including institutional policy formation, loan and savings product design, and corporate culture formation for senior-level management. The results of the study will be effective for Banks and Financial Institutions (BFIs), Microfinance Institutions (MFIs), regulatory authorities, Human Resources (HR) analysts, and planners to take corrective actions to improve the repayment performance of MFIs for credit risk management.

Predicting the financial performance of microfinance institutions with machine learning techniques

Purpose Given the growing emphasis among scholars, practitioners and policymakers on financial sustainability, this study aims to explore the applicability of machine learning techniques in predicting the financial performance of microfinance institutions (MFIs). Design/methodology/approach This study gathered 9,059 firm-year observations spanning from 2003 to 2018 from the World Bank's Mix Market database. To predict the financial performance of MFIs, the authors applied a range of machine learning regression approaches to both training and testing data sets. These included linear regression, partial least squares, linear regression with stepwise selection, elastic net, random forest, quantile random forest, Bayesian ridge regression, K-Nearest Neighbors and support vector regression. All models were implemented using Python. Findings The findings revealed the random forest model as the most suitable choice, outperforming the other models considered. The effectiveness of the random forest model varied depending on specific scenarios, particularly the balance between training and testing data set proportions. More importantly, the results identified operational self-sufficiency as the most critical factor influencing the financial performance of MFIs. Research limitations/implications This study leveraged machine learning on a well-defined data set to identify the factors predicting the financial performance of MFIs. These insights offer valuable guidance for MFIs aiming to predict their long-term financial sustainability. Investors and donors can also use these findings to make informed decisions when selecting their potential recipients. Furthermore, practitioners and policymakers can use these findings to identify potential financial performance vulnerabilities. Originality/value This study stands out by using a global data set to investigate the best model for predicting the financial performance of MFIs, a relatively scarce subject in the existing microfinance literature. Moreover, it uses advanced machine learning techniques to gain a deeper understanding of the factors affecting the financial performance of MFIs.

Review of Literature on Determinants of Loan Repayment Performance in Microfinance Institutions

This article presents a comprehensive literature review on the determinants of loan repayment performance in microfinance institutions (MFIs). The review aims to enhance the understanding of borrower behaviour regarding loan repayment, focusing on socio-economic, institutional, and motivational factors. It synthesises findings from various studies, including the Indian Institute for Mother and Child (IIMC), a nonprofit Indian MFI, to identify critical determinants influencing borrowers' ability to repay loans. Factors such as income stability, education level, financial literacy, and family size are highlighted as significant socio-economic determinants. Loan-specific factors, including loan size, repayment period, and supervision, are also critical. Institutional practices like credit assessment techniques, loan structuring, and technological adoption are examined alongside social factors such as peer pressure, social cohesiveness, and community support systems. Additionally, the review explores borrowers' motivation for taking out additional loans, finding that the drive to reach the maximum loan level positively impacts repayment performance. Empirical evidence suggests that repayment rates increase as borrowers approach their loan limits. The article concludes with recommendations for MFIs to improve their operational strategies by addressing these determinants, thereby enhancing loan repayment rates and contributing to the sustainability and effectiveness of microfinance programs.

The scale effects of agricultural credits, institutional governance and microfinance sustainability in Sub-Saharan African countries

PurposeThe study examines the synthesized influences of institutional governance and the scale effects of agricultural credits on the sustainability of microfinance institutions (MFIs) in Sub-Saharan Africa.Design/methodology/approachUsing a sample of 840 MFIs (300 independent and 540 networked), the study applied Generalized Method of Moments (GMM) and Lewbel’s estimator.FindingsResults indicate positive effects of financial structure, efficiency and agricultural credit scale on sustainability, with a non-linear U-shaped relationship between agricultural credit size and microfinance sustainability. Depending on institutional governance quality, a threshold is identified where agricultural credit scale significantly enhances the quality of Portfolio at Risk (lnPAR) in independent MFIs and Returns on Assets (lnROA) in networked MFIs.Research limitations/implicationsStudy suggests strengthening governance for transparency and operating within optimal size for enduring sustainable performance. While focused on Sub-Saharan Africa, future research could expand to various economies or introduce additional variables for a comprehensive analysis.Practical implicationsMFIs can achieve sustainability by implementing management guided by better institutional norms, innovative financial transformations better suited to financing agricultural activities and techniques and an organizational structure more aligned with their performance targets.Social implicationsBroader and more reliable access to financial services, particularly in the agricultural sector, can stimulate production and alleviate poverty.Originality/valueThe study’s originality lies in its contribution to the literature by examining the role of institutional governance in microfinance institution performance and evaluating microfinance in a broader Sub-Saharan African context, proposing threshold limits where agricultural microcredit compromises performance.

Sources of funding and performance of microfinance institutions over the life cycle

Microfinance institutions (MFIs) typically rely on both commercial sources of funding like equity, debt, and deposits, and non-commercial sources, such as donations and grants. Profit incentive theory predicts that commercial sources of funding positively impact performance regardless of the life-cycle stage of an MFI. Life cycle theory proposes that the sources of funding and the performance outcomes associated with those sources vary by life cycle stage. We test both of these theories using an 18-year global MFI data set. We find evidence of an interplay between profit incentive and life cycle theories as equity funding is positively associated with financial and social performance metrics, but only in mature MFIs. Grant funding is negatively associated with financial performance and positively associated with operating expenses over the entire MFI life cycle. The findings suggest that analyses of funding should consider the lifecycle and that policymakers should expect variation in MFI performance across both the lifecycle and by funding source.

CREDIT RISK ASSESSMENT PRACTICES AND FINANCIAL PERFORMANCE OF MICROFINANCE INSTITUTION IN RWANDA A CASE OF COPEDU PLC

Background: This exploration design, with a case study of COPEDU PLC, aimed to assess the influence of credit risk assessment practices on the financial performance of COPEDU PLC in Rwanda. This exploration design was structured around three specific objects originally, to estimate the influence of customer financial status analysis on the financial performance of COPEDU PLC in Rwanda secondly, to examine the effect of the 5Cs of credit on the financial performance of COPEDU PLC in Rwanda and eventually, to assess the influence of credit risk on the financial performance of COPEDU PLC in Rwanda. Materials and Methods: To achieve the exploration objects, a descriptive and correlation exploration design was used. Data was collected through a combination of both quantitative and qualitative styles, exercising interview attendants and questionnaires. Using tale approach in the slice process, an exploration population of comprising of staff population of 65 at COPEDU PLC headquarters were all be regarded as the sample size. Results: The collected data presented compelling findings grounded on numerical data. specially, the analysis of COPEDU PLCs financial pointers revealed positive comprehensions, with crucial numbers similar as a mean credit score of4.49(SD = 0.75) and a mean debt- to- income rate of4.51(SD = 0.73). These pointers demonstrated a predominant agreement among repliers, with49.23 agreeing on the significance of credit scores and47.69 admitting the significance of the debt- to- income rate. The study also explored the relationship between the 5Cs of Credit and financial performance, revealing specific numbers similar as a mean score of4.35 (SD = 1.15) for collateral and4.42 (SD = 1.13) for capacity. In addition, effective credit risk operation strategies were quantified, with mean probabilities indicating strong agreement (SA) from41.85 of repliers on diversifying the loan portfolio and46.15 on effective loan recovery strategies. The correlation analysis further stressed a robust relationship, with a Pearson Correlation measure of0.894 (p- value = .000), italicizing the statistical significance of the positive association between credit risk assessment practices and the financial performance of microfinance institutions. Conclusion:The exploration study concludes grounding of the findings revealed that COPEDU PLCs credit risk assessment practices significantly impact financial performance, with repliers feting the significanceof crucial financial pointers and the 5Cs of credit. In addition, those effective risk operation strategiesare pivotalfor financial success. still, the study recommends microfinance institutions to upgradecredit riskassessment criteria, train staff on the 5Cs of credit, diversify loan portfolios, ameliorate loan recovery strategies, establish a methodical review process, and invest in technology results to enhance credit risk operationand financial sustainability. Eventually, the study made suggestions for farther exploration on credit risk operation in microfinance institutions, including assayingindividual financial pointers, comparing practices across institutions, assessing risk operation strategies, and tracking long- term goodson financial sustainability and growth. It also suggests comparing variations in credit risk assessment practices and enforcing effective recovery strategies.

Digitization strategy and innovation performance of microfinance institutions: mediating role of innovation capability

Digitization strategy and innovation performance of microfinance institutions: mediating role of innovation capability

Navigating the Cascading Ripples: A Study on the Interplay between the COVID-19 Recession and the Financial Fortunes of Micro Finance Institutions (MFIs)

Purpose: The success of Micro Finance Institutions (MFIs) hinges on effective decision-making amidst challenging economic circumstances, necessitating the ability to anticipate and navigate future business conditions. This research aims to explore the relationship between financial performance and the COVID-19 pandemic's impact on MFIs listed on the National Stock Exchange (NSE) in India. By analyzing financial data and employing statistical techniques, the study seeks to elucidate the resilience of MFIs during the pandemic and the role of financial ratios in predicting earnings per share (EPS). Additionally, the research aims to contribute to a deeper understanding of the interplay between financial indicators and organizational outcomes within the microfinance sector. Design/Methodology/Approach: This research adopts a quantitative approach, utilizing secondary data obtained from quarterly financial reports of selected MFIs listed on the NSE from 2018 to 2022. Statistical analyses such as paired t-tests, correlation, and regression are employed to assess the impact of the COVID-19 pandemic recession on MFIs' profitability and to investigate the relationship between financial ratios and earnings per share (EPS). Findings/Result: Despite the COVID-19 pandemic recession, the profitability of Indian Micro Finance Institutions (MFIs) remained largely unaffected, as indicated by non-significant differences in earnings before interest and taxes (EBIT) before and after the pandemic. Regression analysis highlighted significant influences of financial ratios like the current ratio, total asset ratio, net profit ratio, and gross profit ratio on earnings per share (EPS), underscoring the sector's resilience and the importance of financial analysis in predicting MFI performance. Originality/Value: This research offers novel insights into the resilience of Indian Micro Finance Institutions (MFIs) during the COVID-19 pandemic and underscores the significance of financial analysis in guiding strategic decision-making processes within the microfinance sector. Paper Type: Empirical Research.

Influence of Credit Risk Management Practices on Loan Performance: A Case of Selected Microfinance Institutions in Tanzania

This research investigates the influence of credit risk management practices on loan performance of microfinance institutions. The variables of interest in this study are credit appraisal, credit supervision, credit monitoring (as predictor variables) and loan performance (as dependent variable). However, the study includes average credit processing time as a control variable. The study focuses on five microfinance institutions operating in Tanzania. The research utilizes probability and non-probability sampling to select 140 respondents from the study population. The study collected both primary and secondary data. Data analysis was carried out by applying multiple regression analysis following the assumptions of ordinary least squares (OLS). The findings reveal that credit supervision, credit monitoring, and average credit process time are significant in influencing loan performance in microfinance institutions. Contrary, there is no evidence, whatsoever to suggest that credit supervision influences loan performance in microfinance institutions.

Risk Management Strategy on Financial Performance of Micro Finance Institutions in Uganda: A Case of Rushere Savings and Credit Cooperative Organization in Kiruhura District

Microfinance institutions (MFIs) play a crucial role in promoting international and local development goals, especially in the context of poverty reduction, economic empowerment, and financial inclusion. MFIs provide financial services, such as microloans and savings accounts, to low-income individuals and small businesses. These services are intended to help people lift themselves out of poverty by providing access to capital for income generating activities. Many of the United Nations' Sustainable Development Goals, such as no poverty, zero hunger, and gender equality, can be furthered through the work of MFIs. However, it's essential to note that the impact of MFIs varies depending on the specific institution, its approach, and the regulatory environment in which it operates. While microfinance has the potential to be a powerful tool for development, it is not a panacea and must be implemented effectively to achieve the desired outcomes. Consequently, MFIs face various risks in their operations, which impact their financial stability and ability to achieve their social and economic development goals. To manage these risks effectively, MFIs need to implement robust risk management strategies. The specific objective of carrying out this study was to examine the extent to which risk management influences the financial performance of Rushere Savings and Credit Cooperative Organization in Kiruhura Uganda. The research questions focused on risk assessment, diversification of portfolio, credit risk management, member education, technology risk management, and insurance risk coverage. This study was based on a quantitative research approach. The study was underpinned by the modern portfolio theory. A descriptive research design was used to obtain the responses that were later statistically described in quantified formats. The study considered a target population of 160 people from which a sample size of 127 respondents was selected for this study. Both Stratified proportionate sampling and simple random sampling techniques were used to select individual respondents in their strata. Structured self-administered questionnaires were used for primary data collection. Data was analyzed by the use of inferential statistics with the aid of Statistical Package for Social Scientists (SPSS) version 24.0. The study established a significant positive relationship between risk management and financial performance (β1=-124, p=0.000<0.05). The study concluded that there is a strong positive relationship between risk management and financial performance. The study recommended the implementation of risk management strategies to enhance the performance of SACCOs. Keywords: Risk Management, Performance, Strategy, SACCOs

Effect of Digital Marketing on the Financial Performance of Microfinance Institutions in Rwanda

In this study, the effect of digital marketing on the efficiency of microfinance institutions in the Musanze region was specifically examined. The goal was to assess the effect of digital marketing on the financial performance of the selected MFIs in Musanze district. The specific objectives of the study were to examine the effect of Social Media Marketing on performance of MFIs in Musanze district, to analyze the effect of Influencer Marketing on the performance of MFIs, to ascertain the effect of Mobile Marketing on the performance of MFIs, while also assuring the satisfaction of their staff and that they are operating efficiently to increase revenues. The goals also include implementing technology, measuring the effectiveness of microfinance institutions in the nation that have lagged behind in the marketing sector, and identifying the usual digital marketing channels used by Rwanda's microfinance institutions. The probability sampling technique (Simple Random Sampling) was used in conjunction with stratified sampling approach. This study gathered information from 154 employees at 14 microfinance organizations using a quantitative approach. Both descriptive and inferential statistics were used for the data analysis. The binary regression model and SPSS 24 SOFTWARE were also used for data analysis. The study's findings demonstrate that digital marketing significantly improves how microfinance businesses run. According to respondents, Digital marketing's contribution to the expansion of the loan portfolio is frequently considered to be of negligible importance. This study suggests that microfinance institutions can more fully utilize technology to ensure that their daily tasks are done.

Effect of Capital Structure on Financial and Social Performance of Indian MFIs: A Bibliometric Analysis and Systematic Literature Review

Microfinance Institutions (MFIs) play a crucial role in financial inclusion and social empowerment, with funding sources significantly influencing their overall performance. Despite existing research efforts on the relationship between capital structure and the performance of MFIs, a notable gap remains in the literature, particularly concerning Indian MFIs. This study aims to address this void by examining the influence of capital structure on the financial and social performance of Indian MFIs. The study aims to assess the effect of capital structure on financial and social performance through a systematic literature review of 20 articles using Scopus and Google Scholar. Network analysis and systematic literature review methodologies, employing tools such as Bibliometrix and VOSviewer, were used to scrutinize the selected records. Findings reveal inconclusive outcomes on the effect of capital structure on MFIs' performance, specifically in the heterogeneous context of India, highlighting that while Indian MFIs utilize debt financing to expand services, it may elevate credit risk and non-performing assets, negatively impacting overall performance. The empirical results can guide MFIs in optimizing their capital structures for financial self-sufficiency, enabling better services for underserved populations. The study underscores the need for more empirical analyses, incorporating additional variables and a broader range of MFIs, to enhance reliability and provide actionable recommendations for financing structures and diversified funding sources.

Strategic alliances and social performance of microfinance institutions in Indonesia

AbstractThe objective of this study is to understand how strategic alliances and dynamic capabilities influence the performance of microfinance institutions (MFIs) in Indonesia. The research was conducted on a sample of 235 CEOs/top leaders of MFIs spread across all provinces in Indonesia. Data collection used survey questionnaires. Data testing used SPSS version 25, and structural modeling used Amos version 25. The findings show that strategic alliances significantly influence dynamic capabilities and dynamic capabilities significantly influence social performance. Social performance has a significant effect on financial performance. MFIs are important in establishing strategic alliance and strengthening their dynamic capabilities to improve social performance (depth and breadth of reach) and affect financial performance. Social performance includes the depth of the reach to contribute to improving the quality of life of people experiencing poverty around the MFI's operations and the social responsibility of MFIs to the community through scholarships, free medical assistance, basic food assistance, and building/renovating houses of worship and others.

What are the determinants of the financial and social performance of MFIs in Togo? Does gender borrower matter on financial performance?

Using the panel generalized method of moments, we scrutinize the key factors of financial and social performance of Microfinance institutions (MFIs) in Togo. We report that a higher increase in equity leads to MFIs' financial sustainability while an increase in debt leads to unsustainability. Furthermore, the increase in staff expenditure and operational efficiency decreases financial performance. Interestingly, in the context of Togo, the percentage of male borrowers contributes more strongly to the profitability and sustainability of MFIs than female borrowers. However, in terms of loan repayment, female borrowers contribute more to the sustainability of MFIs than male borrowers

The Mediation Effect of Competitive Advantage on Managerial Competencies-Financial Performance Nexus of Microfinance Institutions in Uganda

Purpose: This study examined the mediating effect of competitive advantage in the relationship between managerial competencies and financial performance of Microfinance Institutions (MFIs) in Uganda.
 Materials and Methods: Adopting a cross-sectional design and a quantitative approach, the study covered 94 Ugandan microfinance institutions, which are members of the Association of Microfinance Institutions in Uganda (AMFIU) in all regions of Uganda. A sample size of 76 MFIs was utilized to collect questionnaire data. The mediating effect of competitive advantage was tested using Hierarchical regression while
 Findings: The study established that competitive advantage partially mediates the relationship between managerial competencies and the financial performance of MFIs in Uganda. The study also concluded that MFIs that survive competition are only those that nourish their competitive strategies and refine their strategic direction, thus improving their financial performance.
 Implications to Theory, Practice and Policy: The study recommends MFIs design policies aimed at attracting competent managers with the relevant skills, knowledge, and abilities. Besides investment in physical capital, MFIs should devise deliberate competitive strategies aimed at enhancing their ability to develop attributes that allow them to outperform their competitors.

Progress and performance of microfinance institutions in Haryana

Progress and performance of microfinance institutions in Haryana

The Impact of Market Orientation on the Performance of Microfinance Institutions in Yemen, a Least-Developed Country: the Mediating Role of IT Capability

The Impact of Market Orientation on the Performance of Microfinance Institutions in Yemen, a Least-Developed Country: the Mediating Role of IT Capability