Analysis of Factors affecting Financial Performance of Microfinance Institution in Tanzania
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Mzumbe University
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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.
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.
Keywords
Financial performance, Loan portfolio on financial performance, YETU Microfinance