Determinants of Operational and Financial Self-Sufficiency: An Empirical Evidence of Ethiopian Microfinance Institutions
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Date
2012-05
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A.A.U
Abstract
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
regression as the main data analysis technique. The study was based on a six years'
secondary data obtained from the mix-market database for twelve selected MFJ in
Ethiopia. The study found that average loan balance per borrower, size of a MFJ,
cost per borrowers and yield on gross loan portfolio affects the operational
sustainability of Ethiopian MFIs significantly. Whereas cost per borrower, number
of active borrowers and yield on gross loan portfolio affect their financial
sustainability. The Study also found that MFIs in Ethiopia are operationally self
sufficient while they are not financially self sufficient. This study recommends
micro finance institutions to consider more numbers of borrowers, find ways of
serving the borrowers at the lowest possible cost, be able to utilize their short term
assets to generate more cash and financial revenues, they should increase the loan
size, and finally it has been recommended that they should increase the value o./their
total assets.
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Keywords
Determinants of Operational, Ethiopian Microfinance Institutions