A Dissertation Submitted in Partial Fulfillment of the Requirements for the
Award of the Master’s degree in Business Administration- Corporate
Management in Mzumbe University
The study focused on assessing factors affecting the financial performance of
microfinance institutions. Specifically, the study examined the impact of quality of
loan portfolio on financial performance, the impact of institutional capacity on
financial performance, and the impact of saving mobilization and outreach of MFI on
financial performance in Tanzania.
The study adopted a descriptive research design considering YETU Microfinance as
the case of the study. A total of 50 respondents participated in the study. The researcher
adopted purposive sampling because the selected respondents possess the required
knowledge and information in answering research questions of the study. Managers
and bank officials took part in answering the questionnaire. Data collected were
analyzed qualitatively and quantitatively through using SPSS were the results were
presented in table form.
The study finds on the quality of loan portfolios the microfinance has, through factors
such as the size of the loans, Loan delivery mode, nature of the loan extended to
customers, rates of loan defaults and cost per borrower affects the financial
performance of microfinance. The analysis also reveals that the geographical coverage,
staff’s qualifications, Technology adoption, breath and outreach of microfinance and
size of the microfinance fell under impact of institutional capacity that also impacts
the financial performance of the microfinance. Furthermore, the findings reveal that
saving mobilization and outreach factors that affect the financial performance of
microfinance such as level of savings, number of borrower’s long-term debt financing,
and the amount of non-repaid loans.
The study concludes that for microfinance institution to maintain an uprising financial
performance it should recognize the importance of the mentioned factors and supervise
their variations repeatedly. The study recommends that organizations need to consider
these three very useful and if possible to be reviewed together whenever loans are
given out to the applicants to reduce the risk of poor loan performances.