LITERATURE REVIEW AND THEORETICAL FRAMEWORK
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- Microfinance Institutions in Ghana: Analysis of the Kraban Support Foundation (KSF).
- Microfinance business models : comparing and contrasting Grameen Bank and Compartamos Banco;
- Microfinance and Poverty Reduction in Nigeria?
- dissertation exclusion in research.
- Master in Integrated Microfinance Management (IMM), Bandung, Indonesia /.
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- TABLE OF CONTENTS.
- Research Summaries in Microfinance and related Topics;
Regulatory reporting requirements and liquidity management requires Head Office to be aware of the position and performance of their branches with greater frequency and reliability. Waterfield and Ramsing emphasize that for a microfinance institution to perform efficiently and effectively, the better its information, the better it can manage its resources. This is supported by Ledgerwood who fronts that good management information systems can improve work of field staff, enabling them to better monitor their portfolios and provide better services to an increasing number of clients.
It enables supervisors to better monitor their areas of responsibility, pinpointing priority areas that most require attention and also helps senior management to better orchestrate the work of the entire organization and make well informed operational and strategic decisions by regularly monitoring the health of the microfinance institutions considering a set of well-chosen reports and indicators.
According to Mainhart , information lies at the very heart of microfinance. Management Information Systems maintain large amounts of crucial business data, from basic client information to detailed analysis of portfolio statistics. They act as a conduit through which raw data becomes useful and usable information which enables successful management of a microfinance Institution. Khachatyran notes that microfinance institutions have a need for financial sources in order to fulfill their commitment in the long term which makes the role of funding institutions to microfinance very important.
The capital accounts play several roles in supporting the daily operations and ensuring the long run viability of financial firms. Smith and Rupp explain that a firm may reach a sustainable competitive advantage through the financial resources it holds since they are rare. Rose and Hudgins, add that availability of funds enables the financial institution to develop new services and facilities.
An analysis of women’s empowerment through microfinance in Flores, Indonesia
Most financial service providers eventually outgrow the facilities they start with. An infusion of additional capital or funds will permit a financial firm to expand into large quarters or build additional outreach offices in order to keep pace with its expanding market and follow its customers. Capital also checks the growth of the financial institution, helping ensure that growth is sustainable in the long run.
Lenders whose funds fails to grow fast enough or declines far enough may find themselves losing market share in the competition for their bigger advancing customers Rose and Hudgins, The reserves established by a financial institution are created to absorb losses that have a high probability of occurring and that are separate from the general business risk incurred by the institution. For example, an increase in interest rates on monies borrowed by the institution without the ability to increase its loan rate by a commensurate amount will result -all things being equal—in a reduction in profits.
A financial institution is not able to provision for movements in interest rates; this constitutes general business risk The Accion Camel, Despite the successes of many MFIs, millions of low-income individuals in developing countries still do not have access to financial services. Performance of microfinance institutions based on the literature is affected by factors of governance mechanisms, management information system and funding. What seems evident from the existing sources is that those factors are still posing challenges for the supply side of microfinance.
The methodology presented shows how the general conduct of the study was handled and is presented in the a subsequent order of the research design, study population, sample size determination and selection strategies, data collection methods, data collection instruments, validity and reliability, data collection procedure, data analysis, and measurement of variables. The researcher used a cross-sectional descriptive case study design which collected data at one MFI only.
The study took the form of a survey, getting information about the factors affecting the performance of microfinance institutions with Hofokam Limited being the case study.
The study adopted both quantitative and qualitative approaches. Descriptive survey approach enabled the researcher to give a general over view of the study as far as microfinance is concerned. The correlation approach enabled the researcher to present each factor contributory role towards the performance of microfinance institutions. It enabled the measurement of how well MFI performance was considering the factors affecting it.
The combination of the two enabled a deep understanding of the study and fact finding Amin, Babie in agreement with Lawrence argues that usually the best study design uses more than one research method, taking advantage of their different strength. This prompted the researcher to use triangulation method. The target for the study was the microfinance industry but more specifically in Uganda with Hofokam Limited being the case for the study.
Out the eight branches that Hofokam has, the study focused mainly on the head office, and main business branches of Fort Portal, Kyenjojo, and Kasese to make the study population. Stratified sampling was be used to identify subgroups of the population representative of the percentages of those same subgroups in the general population being studied, or to equal numbers of individuals within different subgroups for the purpose of comparing their responses to those of other subgroups.
A sample of the staff members and the board was selected to represent each of those categories in the study. To determine the sample size, Yamane was used since for each objective and that each of the subgroups had a different level of significance.
Master in Integrated Microfinance Management (IMM)
To improve data reliability, the researcher used triangulation i. Both primary and secondary data sources were accessed through questionnaires, interviews, and review of available documents about microfinance performance and factors affecting it. Review of literature available on microfinance and its performance was done mainly through the existing literature.
This involved reading journals, articles, books to compare and summarize findings in this area. Further document review on Hofokam as the case study was obtained to ascertain trends of performance of the specific indicators of the microfinance industry like profitability, portfolio size, outreach, sustainability.
Interviews about the state of affairs were also used to collect data from staff and the board member. Interviews were structured to enable response on the main issues in microfinance to be discussed with the respondents. The researcher used both face to face interviews to gain a more personal feeling with the respondents, pen paper questionnaires to save time given that all respondents had a reasonable level of literacy. Observation on the state of affairs at the branches was also used to ascertain the market outreach of Hofokam in terms of the average number of clients served on a given day at the branches.
Structured questionnaires were used for data collection from the staff and the board members because this was the most ideal instrument for the nature of the work at the MFI where staff are rarely free and a majority always in the field operations. The questionnaires used a 3 point liker scale ranging from 3 Disagree to 2 undecided and then to 1 agree. This enabled the respondents to easily express their opinion on the state of affairs.
Semi - structured interview guides were used to stimulate respondents into detailed discussions about the factors affecting MFI performance. The guides helped to standardize the interview situation and to obtain data required to meet specific objectives of the study. To ensure the consistency of measurement, the respondents were given the same questions at two different times in a space of one month before the conditions changed to see whether the responses given were still consistent.
Questions which ascertain the same result were included in the questionnaire and the questions for the respondents were validated by two judges to ensure that the final piece was relevant and well structured. Interviews and questionnaires as data collection methods were administered to staff and the board member. This enabled easy comparison of the responses from each the respondents.
Data clerks assisted the researcher in collecting data from respondents. A work plan on collection of data was shared with senior management to enable the researcher to easily interface with the respondents at the scheduled times. Relevant literature on microfinance performance was obtained from the library, internet and annual reports of Hofokam Ltd as a form of review of the existing literature. Data collected was there after processed and analyzed. There was an establishment of categories, then the application of these categories to raw data through coding, tabulation and then drawing statistical inferences.
The data was condensed into a few manageable groups and tables for further analysis. Data was coded; statistical package for social scientists SPSS helped to summarize the coded data and facilitated quick interpretation. Qualitative data was presented against study objectives and analyzed using explanations. Quantitative data was generated through data coding that yielded numbers.
An analysis of women’s empowerment through microfinance in Flores, Indonesia
These numbers were analyzed using a computer package SPSS that yielded descriptive and inferential statistics to answer research questions and relationships of variables and analysis of variance. Descriptive statistics were used to summarize and describe data. Figures, bar graphs, percentages and frequency tables were used to present the results. In microfinance, performance is measured in terms of outreach, profitability and sustainability. Sustainability was measured by accounting-based indicators. In general, accounting measures are considered more appropriate for long-term studies because managers may be able to manipulate financial statements for a year but their ability to manipulate statements for longer periods is limited Bhagat and Jefferis, thus sustainability was measured by return on assets ROA , and by operational self-sustainability OSS.
Operational self-sufficiency measures how well the MFI can cover its costs through operating revenues. It is a better measure in this context because ROA is self reported and does not necessarily include the value of donations, in-kind subsidies and inflation that MFIs should be incorporating in this ratio. Outreach, in turn, was measured in one dimension of breadth. Breadth of outreach was measured by the logarithm of the number of active borrowers; that is, borrowers with active loans.
The chapter contains presentation, analysis, and interpretation of data. It begins with the response rate and background information of the respondents.
The next section presents the empirical results in relation of the objectives of the study. The response rate shows the participants that were involved in the study.