microfinance phd thesis

Is microfinance breaking new grounds? A cross country empirical investigation of the performance of microfinance institutions

• Financial Engineering

Research output : Thesis › PhD Thesis - Research external, graduation UT

• Microfinance
• Financial development
• Economic welfare
• Asset quality
• Financial performance
• Business models
• CEOs attributes
• Commercial banks
• Banking efficiency

This output contributes to the following UN Sustainable Development Goals (SDGs)

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• 10.3990/1.9789036552073
• PhD Thesis Afsheen Abrar Final published version, 6.47 MB

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• Investigation Social Sciences 100%
• Organizations Social Sciences 100%
• Microcredit Social Sciences 100%
• Banks Social Sciences 30%
• Theses Social Sciences 15%
• Enterprises Social Sciences 15%
• Credit Social Sciences 15%
• Library Users Social Sciences 15%

T1 - Is microfinance breaking new grounds?

T2 - A cross country empirical investigation of the performance of microfinance institutions

AU - Abrar, Afsheen

PY - 2021/7/9

Y1 - 2021/7/9

N2 - This thesis aims to enhance the understanding of microfinance institutions (MFIs) by empirically analyzing their performance in a cross-country setting. It focuses on three research projects, in which the first two analyze the relative performance of these institutions in a dual financial system where microfinance institutions co-exist with commercial banks. The third project analyzes the impact of different CEO attributes on the financial performance of MFIs. The findings of the thesis provide important insights and offer various implications to policymakers, regulators, and MFIs. Policymakers must begin to take steps to incorporate microfinancing into a country's mainstream financial system. The operations and branches of MFIs must be opened in places where they have a market niche or where commercial banks cannot support low-income borrowers. Additionally, MFIs could become more active with start-ups and small-scale enterprises, an operation that has the potential to boost economic growth. Furthermore, policymakers and regulators must introduce new technical ways such as mobile banking and virtual branch networks to minimize the operational cost of microfinance banks and enhance their penetration in remote areas. Likewise, policymakers and regulators should consider adopting systematic risk management techniques such as credit scoring, computerized databases of borrowers' credit histories, loan delinquency rates, and default records to increase the asset quality of these institutions. Finally, MFIs must consider the demographic characteristics when identifying and selecting suitable candidates for the position of CEO. Research findings indicate that MFIs that hire female CEOs, CEOs with business degrees, CEOs with domain-specific experience, and CEOs who are also the founders of MFIs are more likely to increase the financial performance of these institutions.

AB - This thesis aims to enhance the understanding of microfinance institutions (MFIs) by empirically analyzing their performance in a cross-country setting. It focuses on three research projects, in which the first two analyze the relative performance of these institutions in a dual financial system where microfinance institutions co-exist with commercial banks. The third project analyzes the impact of different CEO attributes on the financial performance of MFIs. The findings of the thesis provide important insights and offer various implications to policymakers, regulators, and MFIs. Policymakers must begin to take steps to incorporate microfinancing into a country's mainstream financial system. The operations and branches of MFIs must be opened in places where they have a market niche or where commercial banks cannot support low-income borrowers. Additionally, MFIs could become more active with start-ups and small-scale enterprises, an operation that has the potential to boost economic growth. Furthermore, policymakers and regulators must introduce new technical ways such as mobile banking and virtual branch networks to minimize the operational cost of microfinance banks and enhance their penetration in remote areas. Likewise, policymakers and regulators should consider adopting systematic risk management techniques such as credit scoring, computerized databases of borrowers' credit histories, loan delinquency rates, and default records to increase the asset quality of these institutions. Finally, MFIs must consider the demographic characteristics when identifying and selecting suitable candidates for the position of CEO. Research findings indicate that MFIs that hire female CEOs, CEOs with business degrees, CEOs with domain-specific experience, and CEOs who are also the founders of MFIs are more likely to increase the financial performance of these institutions.

KW - Microfinance

KW - Financial development

KW - Economic welfare

KW - Asset quality

KW - Financial performance

KW - Stability

KW - Business models

KW - Efficiency

KW - CEOs attributes

KW - Commercial banks

KW - Banking efficiency

U2 - 10.3990/1.9789036552073

DO - 10.3990/1.9789036552073

M3 - PhD Thesis - Research external, graduation UT

SN - 978-90-365-5207-3

PB - University of Twente

CY - Enschede

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THE ROLE OF MICROFINANCE IN POVERTY REDUCTION: The Case of Specialized Financial Promotion Institute (SFPI

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According to findings of different authors microfinance is providing financial services to unemployed and low income individuals or groups who would have no access to formal banking services. It has positive impact on the living standard of the poor people in particular and alleviating poverty in their household in general. It is not only undermining poverty in the city, but also empowering women through surviving and making their life prosperous with dignity and self reliance by providing financial services. And also Ethiopian Microfinance is facing different challenges in empowering such as lack of collateral assets, lack of information, work burden, production failures, verbal abuse, lack of infrastructure, low institutional capacity and opportunities of women in microfinance are providing startup capital, women empowerment, poverty eradication, social and political empowerment, improved saving skills and the above challenges listed should be take consideration by government and concerned body as well as problem solving study must be conducted. key words, micro finance ,gender and finance

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Microfinance is currently being promoted as a key development strategy for promoting poverty reduction and empowerment of people economically. This is because of its potential to effectively address poverty by granting financial services to households who are not served by the formal banking sector. This study attempted to investigate the effects of MFIs on poverty reduction. The study focused on places located in Addis Ababa, especially in Akaki Kality sub city as a case study. It intended to cover credit facilities provided by the MFIs and clients perception on income improvement and/or reduced poverty levels. The study used descriptive survey design. The target population was one staff/administrators and 50 clients or recipients of the MFIs. The study employed stratified sampling technique to select staff of the selected MFIs and clients. Both qualitative and quantitative data analysis methods were used. The study revealed that as a microfinance institution has been providing microfinance services to different groups of youth specially women - productive or active poor and that the institution uses various strategies to deliver its services such as granting small loans to women to help them start businesses, grow their businesses and educate their children. To enhance client’s business skills to use credit and establish market channels for their products, the study recommends that microfinance institutions can arrange mechanisms to improve technical and business skills of the poorest through training and loan utilization. The study also recommended that MFIs should put in place micro-insurance schemes which could help clients to pool risk or share losses.

Journal of International Development

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Microfinance and Poverty Reduction in Nigeria: A Case Study of LAPO Microfinance Bank

--> Owolabi, Oluwatomi Ehagbor (2015) Microfinance and Poverty Reduction in Nigeria: A Case Study of LAPO Microfinance Bank. PhD thesis, University of Leeds.

From a contextual and service users’ perspective, this thesis investigates the poverty reducing effect of microfinance including the implementation processes and features of microfinance. Poverty is in this study conceptualised as ‘capability deprivation’ so that poverty reduction is achieved through improved capabilities for the poor. The literature review on microfinance begins with an attempt to locate the reasons for microfinance within the context of the finance-development and credit rationing literature. It also recognises the institutional-based approach to understanding the exclusion of the poor; and recognizes the role of lending group and social relations within the group in shaping individual and social capabilities of the poor. Next, it reviews some of the recent discourses in the microfinance literature. It uncovers a call in the literature for studies that look beyond impact to evaluate the features and characteristics of microfinance delivery and use from the clients’ perspective. The central arguments of this thesis include: (i) the utility or disutility of microfinance stems from the features of microfinance and its implementation strategies, as well as clients’ practices. (ii) The microfinance literature has not paid enough attention to the perspectives of service users, which can adversely affect microfinance assessments and its potential for poverty reduction. The study examines LAPO microfinance intervention in semi-urban and urban areas in Edo State, Nigeria. Given the research objective, design and methods, data collection and analysis were guided by the Interpretive, Capability and Poverty Participatory Assessment approaches. The mixed methods approach is selected as the most appropriate for addressing the research questions. Secondary data as well as primary data sourced from 35 interviews and 62 questionnaires were employed. Data analysis was conducted using qualitative, frequency distributions, cross-tabulations, Logit and OLS regression analysis. This study finds that service user perceptions of poverty place value on a stable source of livelihood, and the ability to meet basic material household needs. Hence, poverty reduction is measured as increased household capabilities as well as the increased ability to achieve successful business outcomes. The findings show that service users’ perceptions affirm the poverty reducing effect of microfinance. It also confirms the proposition that the various implementation processes and features of microfinance have unique effects on service users with differing potential for good or harm. The use of trust and personal relations as criteria for selecting group members, as well as the use of an individual guarantee to insure against risk due to imperfect information, suggests the possibility of exclusion. Heterogeneity in groups as well as low monitoring levels leave service users exposed to greater risk of moral hazard. Peer support enables service users to share ideas and build social networks vital to the success of their businesses and for raising social capital important for combating poverty. Despite the potency of the threat of social sanctions in enforcing repayment, the actual implementation of social sanctions and peer pressure comes at a cost to service users, including damaging social relations. While the targeting of women fosters their empowerment, the labelling of microfinance as a pro-women initiative has the potential to reinforce rather than challenge the prevailing gender bias in the Nigerian society. As regards loans, high repayment burden arising from the use of dynamic incentive creates the potential for harm. The use of savings as loan guarantee against peer defaults also has a similar effect. Although service users affirm the role of savings and non-financial services in the expansion of capabilities, the obscurity surrounding the access to some of the more criteria-determined non-financial services, is found to be damaging to service users’ experience. Hence, this study argues that while there are some links between poverty reduction and microfinance, these two are complexly related.

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Financial Sustainability of Rural Micro Finance Institutions (MFIs) in Tanzania

• G. D. Nyamsogoro
• Published 1 September 2010
• Economics, Business

92 Citations

The impact of staff training and financial regulations on financial sustainability of microfinance institutions in tanzania: a case of morogoro municipality.

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