Life cycle theory and financial sustainability of selected SADC microfinance institutions (MFIs)

2016 ◽  
Vol 50 (6) ◽  
pp. 121-132 ◽  
Author(s):  
Innocent Bayai ◽  
Sylvanus Ikhide
Keyword(s):  
Life Cycle ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Life Cycle Theory

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

2021 ◽  
Vol 3 (1) ◽  
pp. 1-17
Author(s):  
Stephen Kosgei Bitok ◽  
Josephat Cheboi ◽  
Ambrose Kemboi
Keyword(s):  
Fixed Effect Model ◽  
Vital Role ◽  
Strategic Decision ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Financial Leverage ◽  
Life Cycle Theory ◽  
Specific Objective ◽  
Microfinance Institution ◽  
Approach Method

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.

scholarly journals Microfinance institutions’ operational self-sufficiency in sub-Saharan Africa: empirical evidence

2021 ◽  
Vol 6 (1) ◽  
Author(s):  
Laxmi Remer ◽  
Hanna Kattilakoski
Keyword(s):  
Empirical Evidence ◽  
Cost Management ◽  
Sub Saharan Africa ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Return On Assets ◽  
Industry Development ◽  
Management Measures ◽  
Self Sufficiency ◽  
Sub Saharan

AbstractThe topic of financial sustainability in microfinance institutions has become more important as an increasing number of Microfinance Institutions (MFIs) seek operational self-sufficiency, which translates into financial sustainability. This study aims to identify factors that drive operational self-sufficiency in microfinance institutions. To accomplish this, 416 MFIs in sub-Saharan Africa are studied and several drivers for operational self-sufficiency are empirically analyzed. Results indicate that these drivers are return on assets, and the ratios total expenses/assets and financial revenues/assets. The results imply that MFIs should encourage cost-management measures. They also reveal that there may not be a significant tradeoff in self-sufficiency and outreach. These findings will enable microfinance institutions worldwide to sharpen their institutional capabilities to achieve operational self-sufficiency and also provide policymakers with more focused tools to assist industry development.

Trade-off between financial sustainability and outreach of microfinance institutions

2015 ◽  
Vol 5 (2) ◽  
pp. 231-250 ◽  
Author(s):  
Mira Nurmakhanova ◽  
Gavin Kretzschmar ◽  
Hassouna Fedhila
Keyword(s):  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Trade Off

scholarly journals The Impact of Information Communication and Technology Utilization on the Financial Performance of Microfinance Institutions in Rwanda Case Study: Reseau Interdiocesain De Microfinance (Rim) Ltd, Rwanda (2011 -2015)

2017 ◽  
Vol 4 (2) ◽  
pp. 13
Author(s):  
Jean Bosco Harelimana
Keyword(s):  
Financial Performance ◽  
Quantitative Methods ◽  
Positive Impact ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Information Communication ◽  
Qualitative And Quantitative Methods ◽  
Descriptive Survey ◽  
The Impact

The study analyzed the impact of ICT utilization on the financial performance of microfinance institutions inRwanda with case study of Réseau Interdiocesain de microfinance (RIM) Ltd undertaken within 5 years (2011-2015). The study adopted the use of descriptive survey using both qualitative and quantitative methods for a totalsample size of 132. Purporsive and simple random simpling was used for this purpose. Primary and Secondary datawere collected and thene analyzed using SPSS version 16.00. The study found that ICT has been introduced and usedabout 5 years and above. The study found that ICT impact firstly on financial sustainability and profitability (65.8%),secondly on financial efficiency and productivity (23.7) and finally on portfolio quality (5.3%). ICT utilization havea high influence to the RIM Ltd.’s financial performance compared to the previous situation.The correlation results imply that ICT usage has a positive impact on financial sustainability and profitability as theymove in the same direction (R=0.502). The strength of the impact was found to be low due to the low investments inICT among microfinance institutions.

scholarly journals Revenue diversification and financial sustainability of microfinance institutions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peter Nderitu Githaiga
Keyword(s):  
Generalized Method Of Moments ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Revenue Diversification ◽  
Estimation Model ◽  
Data Set ◽  
Content Type ◽  
Method Of Moments Estimation ◽  
The Impact ◽  
Positive Effect

PurposeThis paper aims to investigate whether revenue diversification affects the financial sustainability of microfinance institutions (MFIs).Design/methodology/approachThe study uses a worldwide panel data set of 443 MFIs in 108 countries for the period 2013–2018 and two-step system Generalized Method of Moments estimation model.FindingsThe study finds that revenue diversification has a significant and positive effect on the financial sustainability of MFIs.Practical implicationsThe findings of this study actually offer important managerial and policy lessons on MFIs’ financial sustainability. Microfinance managers and policymakers should consider revenue diversification as a strategy through which MFIs can attain financial sustainability instead of overreliance on donations and government subsidiesOriginality/valueUnlike previous studies that examined revenue diversification in the context of banking firms, this study contributes to literature by examining the impact of revenue diversification of the financial sustainability of MFIs.

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