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Profitability and accountability of South Asian microfinance institutions (MFIs)


Ahmad, Iftekhar and Bhuiyan, Abul Bashar and Ibrahim, Yusnidah and Said, Jamaliah (2016) Profitability and accountability of South Asian microfinance institutions (MFIs). Journal of Scientific Research and Development, 3 (3). pp. 11-21. ISSN 1115-7569

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Abstract

This study aims are measure the profitability and compare the profitability and accountability of microfinance institutions (MFIs) in South Asia. This study adopted a quantitative research approach using secondary data of six MFIs from six countries of South Asia from 2008 to 2012.The data were collected from the Microfinance Information Exchange database. We employed financial ratio analysis, descriptive statistical analysis, and the econometric technique, considered the various performance indicators that have been standardized by the Consultative Group to Assist the Poor to measure the financial performance or the profitability of MFIs. Results showed that yield on gross loan portfolio and the number of active borrowers has significant positive effects, conversely, ages and operating expense ratio have significant negative effects on financial performance. Liquidity ratio has been shown as insignificant, but a positive relationship and cost per borrower was found to have no relationship with the profitability of MFIs. Thus, the study suggests reconsidering the interest rate charged by MFIs as this is one of the major barrier for client's loan repayment. MFIs should also maintain close relationship with borrower to keep them active, for instead, institutions can provide deposits or savings scheme for clients. However, some countries might have regulatory framework that unauthorized deposits service from borrowers.

Item Type: Article
Uncontrolled Keywords: Microfinance; Financial performance; Profitability; Accountability; Sustainability; South Asia
Subjects: H Social Sciences > HG Finance
Divisions: School of Economics, Finance & Banking
Depositing User: Prof. Dr. Yusnidah Ibrahim
Date Deposited: 17 Nov 2016 01:53
Last Modified: 17 Nov 2016 01:53
URI: http://repo.uum.edu.my/id/eprint/19786

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