Browsing by Author "Mirani, Sileshi"

Now showing 1 - 1 of 1
  • No Thumbnail Available
    Item
    Determinants of Financial and Operational Sustainability of Microfinance Institutions in Ethiopia
    (Addis Ababa University, 2015-11) Mirani, Sileshi; Yitayew, Abebe (PhD)
    Researches reveal that an enduring problem facing MFI is how to attain financial and operational sustainability. Several studies have been conducted to determine the factors affecting the financial and operational sustainability of MFIs. However, there are insufficient studies conducted on this area in Ethiopia. Therefore, this study was conducted to fill the gap. This study is based on quantitative research approach using panel data fixed regression as the main data analysis technique. The study was based on a 10 years secondary data obtained from the annual bulletin of AEMFI and mix-market database for 13 selected MFIs in Ethiopia. The study found that grant to asset ratio, cost per borrower, GDP growth rate, deposit to loan ratio and gross loan portfolio, affects the financial self-sufficiency and sustainability of Ethiopian MFIs significantly. Similarly, return on asset, experience of MFIs, cost per borrower, portfolio at risk and operating expense ratio affect their operational sustainability. The Study also found that MFIs in Ethiopia are operationally self-sufficient while they are not financially self-sufficient. This study recommends microfinance institutions to reduce grant to finance their loan, to increase their loan portfolio, find ways of serving the borrowers at the lowest possible cost, increase profitability to raise the return on asset, by making assets operational and minimizing operating expenses. Key words: MFIs, sustainability, FSS, OSS, self-sufficiency