Sustainability Of MFIs Research Articles

Complementary Alliances and Sustainability of Microfinance Institutions: Evidence from Cameroon

Purpose: The Cameroon Microfinance sector has been facing stiff competition as a result of globalization where other players have joined the sector with differentiated innovative products/services rendering MFIs in quest of new strategies of development. Partnerships are becoming an alternative business strategy and hence the formation of strategic alliances in the microfinance industry. This study sought to determine the influence of complementary alliances on the sustainability of MFIs in Cameroon. The objectives were to examine how complementary alliances in financial institutions and complementary alliances in non-financial institutions affect sustainability of MFIs in Cameroon. Materials and Methods: The study used a survey research design to examine the effects of the independent variables on the dependent variable. Purposive and snowball sampling techniques were used in this study. The target population of the study comprised of the 361 MFIs in the Centre, Littoral, NW, SW and West regions of Cameroon that have carried out strategic alliances which were retained and used to develop the sample size. Data was collected through the use of opened and closed ended questionnaires administered to senior management of the MFIs. Data collected was analysed using the Structural Equation Modelling with Ordinary Least Square (OLS) regression estimation techniques to check the robustness of the data set. Findings: OLS Findings suggest that complementary alliances in financial institutions, more than complementary alliances in non-financial institutions has a positive and significant relationship with sustainability of MFIs in Cameroon given their β coefficients of 0.243** and 0.036 respectively. The regression coefficient for complementary alliances in financial institution is significant at 5%. Implications to Theory, Practice and Policy: It is recommended that MFIs should partner with other financial and non-financial institutions in terms of commercialisation of services. This will strengthen their business relationships, enable them have access to resources and expertise from partner organisations to expand their operations, generate revenue that will keep them going and boost the financial growth of the economy.

The Sustainability Model of Microfinance Institutions

The sustainability of microfinance institutions is crucial in fostering financial inclusion and economic development, particularly in developing countries. The purpose of this study is to establish the best-fit model for the sustainability of Micro Finance Institutions. Thus, it is important to look into the sustainability of MFIs. This quantitative study employs a structural equation model to assess the relationships among the exogenous and endogenous variables and establish the best-fit model as its purpose. The respondents were 300 MFI managers and employees with supervisory positions. The study found the best-fit model through various goodness-of-fit models. The findings reveal a robust and statistically significant relationship between independent variables, digital transformation, entrepreneurial orientation, and knowledge management, and the dependent variable, sustainability within MFIs. On the best-fit model, digital transformation exhibits a strong and statistically significant positive influence on sustainability. At the same time, knowledge management and entrepreneurial orientation do not show significant direct effects on sustainability in the specific analysis.

Role of Microfinance in Mitigating Disasters in Pakistan

The study is aimed at exploring the usage of microfinance and related services to mitigate the effect of natural disasters and risk, both at community and industry level in the current Pakistani context. For this purpose, overall work is carried out based on the various strategies adopted by the Micro Finance Institutes MFIs specifically disaster loan funds, disaster preparedness, designing of new products, sustainability of MFIs through post-disaster approaches. It also provides the evidence to recognize the MF roles within disaster risk reduction and mitigation measures. Along with the risk reduction, it delivers the context for poverty alleviation through provision of diversified earning sources and rehabilitation of local community. It is the first study to explore the role of MFIs in disaster risks reduction and mitigation both at community and industry level in the economy of Pakistan.

Determinants of Financial Sustainability of the Microfinance Institutions in Sri Lanka

Today microfinance organizations are facing a challenge with how to balance poverty alleviation mission and sustainability. Hence, the importance of the sustainability of microfinance organizations goes beyond the poverty reduction mission. This research study was meant to determine the influential factors of financial sustainability in microfinance institutions in Sri Lanka. Existing two theories: Welfare Theory and Institutionalist theory were tested in MFIs in Sri Lanka with cause and effect relationship between variables, and the researcher adopted a cross-sectional research design with quantitative approach conducted in a field setting. Financial self-sufficiency is the dependent variable and twenty independent variables were used to test the determinant factors of sustainability. It was found that, the loan officer productivity, MFIs age, organization type, the yield on the gross loan portfolio, and profit margin have a positive and statistically strongly significance at 1% significant level. These factors profoundly affect the determination of the financial sustainability of MFIs in Sri Lanka. Further, the interest rate was positive with 5% statistically significant level, and active borrowers were positive with 10% in determining the financial sustainability of MFIs. Operating expenses ratio and capital structure negatively affected with 1% statistically significant level, where portfolio risk at 30 days affected negatively at 5% in determining the financial sustainability. Moreover, other factors: average loan size, the percentage of female borrowers, MFIs size, cost per borrower, number of MFIs products, lending methodology, geographic locations, write off ratio, risk coverage ratio and MFI regulations did not have a significant impact on financial sustainability in Sri Lanka.

Influence of Financial Leverage on Financial Sustainabilit: A Case of A Microfinance Institution in Kenya

Microfinance institution plays a crucial role in economic development and financial inclusion. Financial sustainability is the key dimension to microfinance institutions growth. Which further indicate the importance of which Financial sustainability is. Therefore, the present study investigated the effect of financial leverage on MFI financial sustainability. The specific objective was to establish the effect of financial leverage on the financial sustainability of MFIs. The study was guided by agency theory and life-cycle theory. The study adopted an explanatory research design where a panel approach was used as well as the positivist paradigm. The study adopted the census approach method. Panel data was drawn from 30 MFIs for a period between 2010 and 2018 from the mix market database using the data collection schedule. The study used both descriptive and inferential statistics to analyze data with the help of STATA software. Fixed effect model based on Hausman test (X2 = 45.41, p= 0.000 ≤ 0.05). Based on the findings of the study financial leverage ( the study had a positive and significant effect on the financial sustainability of MFIs. The study recommended MFIs managers to engage in the prudent use of financial leverage so that they enhance their overall profitability and boost investor confidence in their strategic decision-making resulting in financial sustainability. The results have an implication to business managers and policymakers given the vital role in service delivery and the challenges hindering the sector from the realization of financial sustainability in the economy.

A Review of Existing Literature on Sustainability, Mission Drift and Loan Defaults

As the abundance of research work has been done in the field of Microfinance in the last two decades. This research work deals with the issue of factors affecting operational self-sufficiency, financial self-sufficiency and loan repayment performance and the trade-off between financial performance and outreach to poor and women clients. The section one deals with prior research work on factors affecting the sustainability of MFIs. Section two reviews prior research works on Mission drift i.e. trade-off between sustainability and outreach. Finally, section three deals with the factors affecting loan repayment performance.

Determinants of Loan Repayment: The Case of Microfinance Institutions in Gedeo Zone, SNNPRS, Ethiopia

The objective of this study was to identify and examine the determinants of loan repayment in MFIs in Gedeo zone, SNNPRS, Ethiopia. In fact, identifying and examining such determinant factors of loan repayment is vital in the achievement of profitability and sustainability of MFIs. Out of total population of 6662 (1610 defaulter and 5052 non-defaulter borrowers), 364 representative sample from borrowers are selected by using stratified random sampling from borrowers by dividing the borrowers in to two strata, in terms of loan payment status as defaulters and non-defaulters. In this connection, the researcher collected data from primary and secondary sources and analyzed by using binary logistic model. A total of ten explanatory variables were included in this model and out of these, six variables were found to be statistically significant to influence the probability of loan repayment. These significant variables are: educational level, method of lending, nearness of borrower's residence to the institutions, family size, and income from activities financed by loan and training. The researcher suggests that the identified significant variables to be a spring board for further interventions by Microfinance institutions, stakeholders and policy makers so as to come with a breakthrough to significantly decrease or even avoid defaulting problems. On the basis of the study findings, the researcher also provided some recommendations that are vital to reduce loan repayment problems and improve loan repayment performance of borrowers in the study area. These includes: proper training, continuous supervision, enough loan officers or committee and technical support for borrowers on profitable business activities.

Les Institutions De La Microfinance Entre La Responsabilité Sociale Et La Performance Financière: Cas Des Associations De Micro-Crédits

In recent years, microfinance becomes an engine of social and solidarity economy. The success of the microfinance sector and the media attention it generated as a tool to fight against poverty. It has increased the interest in the sector and attracted a number of private players (banks and investment funds) for which the financial profitability is crucial. This trend has enabled the sector to continue to grow and be more professional. Yet today this sector is subject to severe criticism on the risk of drifts of its institutions as over-indebtedness of clients and academic questions about the real impact of microcredit. The maturity of microfinance calls for growth and mastered firmly based on core principles (financial inclusion, customer protection, appropriate services etc.) in order to guard against the excesses of excessive commercialization which would be driven solely by the profit motive (financial profitability). Currently, microfinance institutions must demonstrate not only their reliability, cost efficient, their corporate and social responsibility. So complementarily between financial return and social performance is necessary for the sustainability of MFIs. Thus, a strong financial performance allows MFIs to have the capacity to pursue social objectives, and conversely, achieving social goals also improves profitability.

Financial sustainability of MFI’s - key factor for the growth and development of SME’s in Albania

The Albanian economy, as an economy of a developing country actually characterized by a positive trend upward. Macroeconomic indicators are demonstrating relatively stability, the financial system is healthy and progressing economic activity. SMEs contribute strongly to economic progress of the country. The importance of SMEs mainly valued as they contribute to the growth of employment in the country, producing for the domestic market mainly using national resources. Agribusiness is an integral part of the national economy and requires continued financial support. For several factors they are not supported financially from dhe commercial bank in Albania. Microfinance institutions has been a powerful tool for the development of SMEs, especially in rural areas, creating new jobs while contributing to economic development of the country. This research will study the impact and collaboration of MFIs in Albania, in promoting the creation, growth and development of SMEs, which is closely linked to an important aspect of the activities of MFIs, even with financial stability and increased performance. The financial sustainability of MFIs is a crucial factor in related to the ability to provide services in full compliance with the objectives, scope and mission. Achieving sustainability is a guarantee for MFIs to be safe in their activities in order to consolidate their future. The essence of this paper is to contribute to the theoretical and practical analysis about financial sustainability of MFIs in Albania with regard to strengthening relations MFIs and SMEs. Keywords: Sme; Mfi; Financial Stability; Funding Sources

The sustainability of MFIs in Uganda: the need for consumer protection while balancing stakeholders' interests

Microfinance has taken centre stage in the quest for poverty eradication in Uganda. Microfinance providers traverse the country, many with an objective of making a return on their investment, NGOs notwithstanding. The investment in the sector has grown to enormous proportions. This increased investment, however, has come with increased competition. Amid this increased investment and competition, consumers have taken the backseat to profit-making among many providers. Questionable means of recovery, high interest rates, non-transparent contracts, standard form contracts, cash collateral, fraud against clients, arrest, and committal to civil prison using ex parte judgments have become common phenomena. There is a need to change the legal framework to protect the consumer against the said abuses. Training of loans officers, increased monitoring, insurance, training microfinance clients, and formulating standard acceptable contracts with fair terms to be used by all providers seem to be the only solutions to consumer protection.

'The provision of support to HIV/AIDS-affected clients jeopardizes the sustainability of MFIs'

'The provision of support to HIV/AIDS-affected clients jeopardizes the sustainability of MFIs'