Current Journal of Applied Science and Technology

Submit Manuscript


Subscription



Determinants of Financial Performance of the Microfinance Institutions in Tamil Nadu

Current Journal of Applied Science and Technology, Page 56-67
DOI: 10.9734/cjast/2022/v41i1831738

Abstract


Aims: To study and analyze the major determinants of financial performance of the microfinance institutions in Tamil Nadu.


Study Design:  Purposive Random Sampling method was used. Both primary and secondary data was used for the analysis.


Place and Duration of Study: In Tamil Nadu, Coimbatore district was purposively selected for the study. Survey was conducted for the collection of primary data pertaining to the period of 2021-22 and also secondary data was collected for the period of 2010-2019 from the Microfinance Information Exchange Market.


Methodology: The secondary study is based on unbalanced panel data consists of 10 major Microfinance institutions in Tamil Nadu, out of around 25 microfinance institutions. To study the major determinants of financial performance of the 10 microfinance institutions in Tamil Nadu panel regression (fixed and random effect model) technique was employed. In addition, to analyze the general characteristics and constraints the percentage analysis and Garrett ranking technique was employed respectively.


Results: The results of the study revealed that financial indicators such as operating self-sufficiency, Return on Assets, and Assets had a positive impact on increasing the performance of MFI. According to the panel regression, Debt-Equity Ratio, Number of Active Borrowers, Percentage of Women Borrowers, Operating Expenses to Asset ratio and Total Equity to total Asset are statistically significant in the model and suggesting the improvement in the Microfinance loan and building of training facilities.


Conclusion: This study shows that the majority of the respondents depend on MFIs are females than males, and most of the beneficiaries were in the middle age group of 30-40 years old who preferred to approach the MFI for getting loans. The results specified Operating Self Sufficiency is positively and significantly related compared to Return on assets and Asset value.

Keywords:
  • Financial performance
  • microfinance
  • women borrowers
  • panel regression

How to Cite

Rani, S. P., Nithyavathi, K., Vidhyavathi, A., Hemalatha, S., & Prahadeeswaran, M. (2022). Determinants of Financial Performance of the Microfinance Institutions in Tamil Nadu. Current Journal of Applied Science and Technology, 41(18), 56-67. https://doi.org/10.9734/cjast/2022/v41i1831738

References

Rupa M. Financial performance of MFIs in India-A Multiple Regression analysis. International Journal of Management and Social Science Research Review. 2015; 13(1):148-159.

Sen Mitali. Assessing social performance of microfinance institutions in India. The ICFAI Journal of Applied Finance. 2008; 14(86):77-86.

Kannan M, Panneerselvam A. The microfinance in India - An overview. International Journal of Current Research and Academic Review. 2013;1(1):78-83.

Tripathi VK. Microfinance-evolution, and microfinance-growth of India. International Journal of Development Research. 2014; 4(5):1133-1153.

Sharif Mohd. A Study on the performance of microfinance institutions in India. International Academic Journal of Accounting and Financial Management. 2018;5(4):116-128.

Pal Narwal K, Pathneja S, Kumar Yadav M. Performance analysis of banks and microfinance institutions in India. International Journal of Management and Business Research. 2015;5(1):9-18.

Saunders M, Mann R, Smith R. Benchmarking strategy deployment practices. Benchmarking: An International Journal. 2007;14(5):609-623.

Abbas F, Tahir M, Rahman M. A comparison of financial performance in the banking sector: Some evidence from Pakistani commercial banks. Journal of Business Administration and Education. 2012;1(1):1-14.

Coleman KA. The impact of capital structure on the performance of microfinance institutions. Journal of Risk Finance. 2007;8(1):56–71.

Rai A K, Rai S. Factors affecting financial sustainability of microfinance institutions. Journal of Economics and Sustainable Development. 2012;3(6):1-10.

Rahman M. Islamic micro-finance programme and its impact on rural poverty alleviation. International Journal of Banking and Finance. 2010;7(1):119-138.

Suberu, JO, Aremu SO, Popoola GE. The impact of microfinance institutions on the development of small-scale enterprises in Nigeria. Journal of Research in International Business Management. 2011; 1(8):251-257.

Ghatak M, Guinnane T. W. The economics of lending with joint liability: Theory and practice. Journal of Development Economics. 1999;60(1):19-228.

Hermes, Hudon. Determinants of the Performance of Microfinance Institutions: A Systematic Review. Journal of Economic Surveys. 2018; CEB Working Paper: 1-60.

Hermes N, Lensink R, Meesters A. Outreach and efficiency of microfinance institutions. World Development. 2011; 39(6):938-948.

Beg K. Determinants of financial self-sufficiency of Andhra Pradesh microfinance institutions. Journal of Business and Financial Affairs. 2016;5(3): 1-9.

Bhatt S, Jhaveri H. Microfinance: A one-stop-shop for financial services to the poor. Management Trends. 2008;5(1):85-89.

Agarwal PK, Sinha SK. Financial performance of microfinance institutions of India-A cross sectional study. Delhi Business Review. 2010;11(2):37-46.

Rai A, Anil K. Financial performance of microfinance institutions: Bank versus NBFC. International Journal of Management and Strategy. 2011;2(2):1-14.
Available:https://databank.worldbank.org/source/mix-market

Levin A, Lin CF, Chu CSJ. Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics. 2002; 108(1):1-24.

Gujarati DN. New York, United Basic econometrics. States: McGraw Hill; 2004.
  • 59 times
    PDF Download: 19 times

Download Statistics

Make a Submission / Login
Information
Current Issue