Performance of Microfinance Institutions in Ethiopia: Integrating Financial and Social Metrics

Wassie, Solomon Bizuayehu; Kusakari, Hitoshi; Sumimoto, Masahiro

doi:10.3390/socsci8040117

Cited by 18 publications

(25 citation statements)

References 22 publications

(75 reference statements)

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“…On her study on a small sample of Indian MFIs, Kulkarni (2017) finds no indication of conflict between their outreach and efficiency objectives. On their study on Ethopian MFIs, Wassie et al (2019) find no evidence of conflict between social and financial performance of MFIs.…”

Section: Literature Reviewmentioning

confidence: 93%

Social and financial performance of MFIs: complementary or compromise?

Navin

Sinha

2020

XJM

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Purpose With the ongoing transformation of the microfinance sector, questions have been raised on the ability of microfinance institutions (MFIs) to perform financially well without compromising with their social objectives. The current study attempts to analyse the social and financial performance of Indian MFIs with an objective to find the kind of relationship between these two objectives. Design/methodology/approach The dynamic framework of simultaneous equations model is used to find the nature of the relationship which exists between social and financial performance of Indian MFIs. Findings The study finds that depth of outreach enables MFIs to achieve financial sustainability. On the other hand, financially strong MFI lend more as reflected by an increase in their average loan size. Research limitations/implications Many MFIs still receive subsidies to support their operations. Ideally, adjustments should be made to remove the effect of such subsidies on their cost. However, due to non-availability of data, the study fails to make any adjustment for the subsidies. Practical implications The presence of a complementary relationship between social and financial performance in the Indian microfinance sector is quite encouraging for the policymakers during the current time when the sector is becoming less dependent on subsidies. However, the recent upsurge in the average loan size requires attention. Social implications The findings suggest that MFIs can achieve financial sustainability while targeting poor clients. This indicates that MFIs can perform socially good along with their financial performance. Originality/value Such study is vital when the Indian microfinance sector is moving away from subsidies to become self-reliant and commercialised. Few studies have focused on this aspect of Indian microfinance sector.

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Section: Literature Reviewmentioning

confidence: 93%

Social and financial performance of MFIs: complementary or compromise?

Navin

Sinha

2020

XJM

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“…The profitability is associated with all MFIs operations and is influenced by many factors, including: Firstly, productivity: The result of Berguiga et al (2017) found that staff productivity was one of the determinants of return on assets and that the effect of staff productivity on return on assets was very significant for MFIs. According to Wassie et al (2019) the number of loan officers, loan officer productivity, and personnel productivity have a positive and significant impact on the financial performance of MFIs. In other words, productivity has a positive impact on the profitability of MFIs.…”

Section: Profitabilitymentioning

confidence: 99%

The Interactive and Causal Relationship between Productivity and Profitability of Vietnam’s Formal Microfinance Institutions

2019

Asian Economic and Financial Review

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Productivity and profitability are the most complex areas of financial decision making due to their interrelationship with other financial decision variables. At the same time, productivity and profitability are factors affecting the operations and goals of formal microfinance institutions (MFIs) in Vietnam. This study's purpose was to discover the interaction and causal relationship between productivity and profitability and to examine factors that affect the productivity and profitability of formal MFIs. After regression analysis on a set of panel data from 2010 to 2018 of all formal MFIs in Vietnam, it appeared that profitability and debt-to-equity ratio have positive relationships with productivity and that the number of branches and deposits have negative relationships with productivity. Productivity has a positive relationship with profitability and both the debt-to-equity ratio and equity have negative impacts on profitability. The study found bidirectional interactions and a causal relationship between productivity and profitability. Based on the findings the study proposes policy measures that could be implemented by the managers of formal MFIs to increase productivity and ensure a more efficient distribution of economic resources. This study also helps managers of formal MFIs understand the key determinants for better management of formal MFIs. Contribution/ Originality:This study is one of very few studies which have investigated panel data on the interactive and causal relationship between productivity and profitability of Vietnam's Formal Microfinance Institutions and the results could serve as a valuable reference for other developing countries.

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“…It is unlikely to attain sustained agricultural development without sustained utilization of improved agricultural technologies by farmers by providing rural financial services at all. 4 According to Wassie et al, 5 MFIs in Ethiopia attain their goal of serving the poor with higher and deeper outreach; showing positive impact. When we talk about impact, we are concerned not only with what changes have happen in selected indicators of welfare, but also with establishing how much such changes can be attributed to specific MF products or interventions.…”

Section: Background and Justification Of The Reviewmentioning

confidence: 99%

Is Africa Ready for the SDG 2 (Zero Hunger) Target by 2030?

Otekunrin

2021

Curr Agri Res Jour

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In recent time, the prevalence of hunger, malnutrition and food insecurity have increased in most African countries as the continent continued to experience rising number of people that are undernourished. This paper reveals the progress of African region in pursuit of SDG 2 target by 2030 considering both the global and Africa SDG threshold (rating) in 2019. The SDG2 target achievement in Africa is facing serious obstacles such as high level of poverty, unemployment, social exclusion, corruption, banditry, kidnapping, conflicts, and terrorism. With enormous challenges confronting Africa, can SDG 2 target be achieved in the continent by 2030?

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Performance of Microfinance Institutions in Ethiopia: Integrating Financial and Social Metrics

Cited by 18 publications

References 22 publications

Social and financial performance of MFIs: complementary or compromise?

Social and financial performance of MFIs: complementary or compromise?

The Interactive and Causal Relationship between Productivity and Profitability of Vietnam’s Formal Microfinance Institutions

Is Africa Ready for the SDG 2 (Zero Hunger) Target by 2030?

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