Determinants of Organizational Success of MFI in Ethiopia

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Addis Ababa University


The microfinance sector has become a major channel for the provision of financial services to the poor citizens and the formal business sector that are avoided by the banking system on the basis of being high risk. This study focuses on determinants of organizational success supporting the goal attainment of Microfinance Institutions (MFIs) in Ethiopia. It adopts explanatory methods to identify the determinant factors of organizational success in the microfinance industry. The purpose of this study is to identify the major determinants of organizational success of MFIs. From the total of 35 MFIs which are operating in the country, six MFIs have been selected for the study by way of a purposive sampling technique and six determinant variables (leadership, corporate governance, risk management, regulatory framework, access to resource and coverage and marketing) have been used for the study. On the other hand, organizational success was used variables as a goal attainment perspective. The determinant factors of organizational success examined by using primary data gathered from managers and senior expert respondents of six samples of MFIs and the study used quantitative research approach. The data were analyzed by using multiple linear regression models. The empirical result shows leadership, corporate governance, risk management, regulatory framework and access to resources have positive and significant relationship with organizational success of MFIs while coverage and marketing has insignificant relationship. Based on the result of the study, it is recommended that the board of directors and managements should have an industry specific skills and experience. Risk monitoring activities must be supported by information management system.


A thesis submitted to the department of accounting and Finance in partial fulfillment for the requirements of the degree of Master of Science in Accounting and Finance


Corporate Governance, Leadership, Organizational Success