Abehode, Wollella (PhD)Mulu, Adisu2018-10-252023-11-042018-10-252023-11-042016-10http://etd.aau.edu.et/handle/123456789/13198The purpose of this study is to assess the financial performance of microfinance institutions and the perception of their contribution for community development. The researcher used both qualitative and quantitative research approaches. Specifically, the study employs data obtained from a documentary review, a questionnaire survey and interviews through random and purposive sampling techniques respectively. The researcher chose 98 clients from ADCSI and 81 clients from OCSSCO through random sampling technique in Sendafa Bekie town and 60 clients from ADCSI in Yeka sub city wereda 11 branches through random sampling for the purpose of comparison. The study revealed that Addis credit and saving institution have achieved the outreach, return on equity, operational self-sufficiency and profitability. However, the institution has not achieved the portfolio quality, return on asset and efficiency for the last five years. Outreach, profitability, operational self-sufficiency, operational cost and return on equity of Oromiya credit and saving Share Company are improved over time. However, portfolio quality and Cost per borrower of Oromiya credit and saving Share Company is not improved. Also the results show that the living standards of the communities and business operations are perceived to be improved after they join the microfinance program in Sendafa Bekie town and Yeka sub city, but it is better in Yeka sub city. The main challenges while providing microfinance services are Shortage of skilled man power, failures of clients business, Loan default, limited portfolios and transportation problems during follow up. Finally, based on this study, it is recommended that MFIs should try to diversifying the microfinance program, offer enough capital to run their business and establish strong networks with governmental and non-governmental organizations to provide effective microfinance services to the poor communities in Sendafa Bekie town.enContribution for Community DevelopmentThesis