Browsing by Author "Berhanu Ashenafi"

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    Determinants of Financial Performance of Micro-Finance Institutions in Ethiopia
    (2021-07) Berhanu Ashenafi; Kassie Abebaw
    The study examined determinants of financial performance of 17 Ethiopian MFIs for period of 10 years (2009-2018). The study adopted a quantitative research approach and used secondary dataobtained from the annual bulletin of AEMFI and mix-market database. The data collected was analyzed using descriptive and regression analysis. The findings of the study established Portfolio at Risk 90, Operating Expense Ratio and Debt-Equity Ratio insignificantly influence the financial performance of microfinance institutions in Ethiopia. Whereas, Capital to Asset Ratio has negative significant influence on financial performance; Loan to Asset Ratio and Cost per Borrower has positive significant effect on ROA. Based on the finding of the study capital to asset ratio, asset allocation and cost per borrower are vital factors among others to determine the institutions’ profitability then sustainability. Thus the study recommends that MFI’s management should decrease capital-to-asset ratio up to optimum level and increase loan-to-asset ratio. Since the study found positive relationship between cost per borrower and profitability, MFIs in Ethiopia are beneficiaries if they lift up cost per borrower dispensed for the good of their institutions and in order to increase their financial performance.