Microfinance Institution Performance: Does the Macroeconomy Matter?

Churchill, Sefa Awaworyi; Danso, Jeffrey Korankye; Nyatefe, Elikem

doi:10.1111/1759-3441.12233

Cited by 5 publications

(5 citation statements)

References 24 publications

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“…Since the main aim of MFIs is to service the poor to increase employment rate, a higher unemployment rate will most likely enhance the demand for various microfinance services. In this regard, Awaworyi Churchill et al (2018) also argued that the presence of a high unemployment rate will force people to establish their businesses and apply for loans from MFIs to promote their establishment. Therefore, a positive impact of unemployment rate on financial performance is anticipated in this study.…”

Section: Methodsmentioning

confidence: 99%

“…Therefore, a positive impact of unemployment rate on financial performance is anticipated in this study. The outcome of GDP growth can be explained in two ways: First, a high economic growth can increase the demand for microfinance services owing to the expansion of overall market and creation of new niche to support the overall growth of the economy (Awaworyi Churchill et al, 2018). Second, being an informal sector, the microfinance industry might grow and attain better financial performance in countries that are poor and less developed (Ahlin et al, 2011).…”

Section: Methodsmentioning

confidence: 99%

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The impact of employee turnover on the financial performance of microfinance institutions: A global evidence

Mia

Ahmad

Halim

2022

Business and Society Review

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Microfinance is a preferred development tool in many developing countries around the world; however, the industry has been facing many challenges in recent years, including the attainment of financial sustainability. Therefore, this study is aimed at investigating the effect of employee turnover on the financial performance of microfinance institutions (MFIs). The study utilized unbalanced panel data of 1561 unique MFIs from 2010 to 2018. The data were then analyzed by conventional econometric techniques such as the pooled ordinary least squares, random effects model, fixed effects model, Hausman–Taylor, and the two‐step system generalized method of moments. Considering the linear relationship, it was discovered that employee turnover has a negative effect on the financial performance of MFIs. However, this relationship is dependent on the proxies of financial performance, legal status, location, profit orientation of the MFIs (for subsample analysis), and the technique(s)/model(s) employed in the analysis. Furthermore, the study did not find empirical evidence to support the quadratic relationship between employee turnover and the financial performance of MFIs. The outcome of this study advances important policy implications for concerned stakeholders.

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

The impact of employee turnover on the financial performance of microfinance institutions: A global evidence

Mia

Ahmad

Halim

2022

Business and Society Review

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“…To examine the non-linear relationship, we have included the quadratic terms (ETR 2 ) of ETR in our model. In reference to several previous studies, the model was also controlled by organizational and macroeconomic factors due to their significant effect on various performance indicators of MFIs (Churchill et al , 2018; Chmelíková et al , 2019; Nyanzu et al , 2019).…”

Section: Methods and Datamentioning

confidence: 99%

Employee turnover and the social outreach (breadth): international evidence from the microfinance industry

Mia

Jibir

Omeke

2023

SRJ

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Purpose Earlier studies on employee turnover have invested enormous scholarly mileage to understand and address human resource challenges. Considering the substantial evidence on the negative and non-linear relationship between employee turnover and firms’ performance, the purpose of this study is to investigate the effects of employee turnover on the social outreach (e.g. breadth of outreach) of microfinance institutions (MFIs), also known as the financial inclusion agenda of the Sustainable Development Goals. Design/methodology/approach To achieve the study objective, the authors collected unbalanced panel data of 1,391 MFIs, covering a total of 96 economies and a period of 2010–2018. The organizational and macroeconomic data were obtained from the World Bank’s Mix Market and World Development Indicators databases, respectively, and subsequently analysed using the pooled ordinary least squares, random effects model, fixed effects model and generalized method of moments. Findings Overall, the authors found that employee turnover has a positive impact on the social outreach of MFIs, which suggests that employee turnover reduces organizational blindness and groupthink, potentiates efficiency gains and minimizes retention costs. On the contrary, this study does not find evidence of a non-linear effect of employee turnover on the outreach objectives of MFIs. Meanwhile, these effects were observed to vary depending on the proxy, sub-samples and techniques used in the analysis. Originality/value Motivated by the paucity of literature, the study has uniquely investigated the effect of employee turnover on the social outreach objective of MFIs by using relatively recent and global-level data. The study findings can help managers and the human resource departments to make optimum decisions about employee turnover management.

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“…, 2018; μ i is the time-invariant firm-specific effects; and ε i,j,t is the error term. The model was also controlled by several organizational and macroeconomic factors, in line with existing studies (Awaworyi Churchill et al, 2018;Nyanzu et al, 2019). In terms of organizational characteristics, we controlled our model by including the natural logarithm of the cost per borrower (LNCPB), proportion of female board members (FBM), natural logarithm of board of directors (LNBM), debt to equity ratio (DTE), natural logarithm of net fixed assets (LNFA), and portfolio at risk over 30 days (PAR30).…”

Section: Modeling Client's Loyaltymentioning

confidence: 99%

Loyalty of rural microfinance borrowers: International evidence

Mia

2023

Bulletin of Econ Res

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The growth and financial sustainability of a firm is tied to its ability to retain existing and potential clients. On the contrary, the defection of customers has a huge implication on firms including microfinance institutions (MFIs), suggesting that the attainment of customer loyalty is an important strategy for MFIs to improve their performance. Hence, this study attempts to investigate the level of loyalty demonstrated by rural microfinance borrowers toward their respective service providers. To accomplish this, an unbalanced panel data, comprising 1101 unique MFIs and spanning the timeframe 2010–2018, were obtained from the World Bank database and thereafter subjected to conventional econometric techniques and a series of robustness tests, including endogeneity‐corrected methods, alternative proxies, and sub‐sample analyses. The findings indicate that rural microfinance borrowers generally demonstrate loyalty to their service providers, particularly when measured by borrower retention rates; however, these findings vary with the adopted techniques, sub‐samples, and proxies employed during the analysis.

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Microfinance Institution Performance: Does the Macroeconomy Matter?

Cited by 5 publications

References 24 publications

The impact of employee turnover on the financial performance of microfinance institutions: A global evidence

The impact of employee turnover on the financial performance of microfinance institutions: A global evidence

Employee turnover and the social outreach (breadth): international evidence from the microfinance industry

Loyalty of rural microfinance borrowers: International evidence

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