Determinants of the financial performance and sustainability of microfinance institutions in Togo

Year 2023, , 1 - 11, 27.04.2023

Komlan Edem Agboklou , Burhan Özkan

https://doi.org/10.30976/susead.1078784

Cited By: 1

Abstract

Purpose - This article investigates the factors influencing the financial performance and the level of financial sustainability of microfinance institutions (MFIs) in Togo.
Methodology - Ordinary least squares models and binary probit models were employed in the research to identify the determinants of return on assets as a proxy for the financial performance and operational and financial sustainability of microfinance institutions. Unbalanced panel data collected from the MIX Market database of 29 MFIs in Togo over the period 1999–2018 was used in the study
Findings – The results show that MFI's financial performance is positively and statistically influenced by size. However, the number of depositors per borrower and the loan loss ratio is negatively linked to financial performance. The operational sustainability was positively related to the depositors per borrower ratio, the PAR > 30 (Portfolio at Risk 30 days), and the productivity ratio. On the other hand, it is negatively related to PAR > 90 and the ratio of personal expenses to outstanding credit. Finally, financial sustainability was significantly and positively influenced by the size, and it was significantly and negatively influenced by PAR > 90.
Conclusions – Taking these results into account can allow microfinance actors in Togo as well as politicians and donors to better orient their actions in the sector.

Keywords

Financial performance, financial sustainability, Microfinance, Togo

Togo'da mikro finans kurumlarının finansal performansı ve sürdürülebilirliğinin belirleyicileri

Abstract

Amaç - Bu makalenin amacı, Togo'daki mikrofinans kuruluşlarının (MFI'ler) finansal performansını ve finansal sürdürülebilirlik düzeyini etkileyen faktörkeri incelemektir.
Yöntem - Mikrofinansların finansal performansı, operasyonel ve finansal sürdürülebilirliğini etkileyen faktörleri belirlemek için araştırmada sıradan en küçük kareler ve ikili probit modelleri kullanılmıştır. Çalışmada 1999-2018 döneminde Togo'daki 29 MFI'nin MIX Market veri tabanından toplanan panel verileri kullanılmıştır.
Bulgular – Araştırma sonuçları, MFI'nin finansal performansının pozitif ve istatistiksel olarak büyüklük değişkeninden etkilendiğini göstermektedir. Ancak, borçlu başına düşen mudi sayısı ve kredi zarar oranı finansal performansla negatif ilişkilidir. Operasyonel sürdürülebilirlik, borçlu başına mudi oranı, PAR>30 (Risk Altındaki Portföy 30 gün) ve verimlilik oranı ile pozitif ilişkilidir. Öte yandan, PAR>90 ve kişisel giderlerin, ödenmemiş kredilere oranı ile negatif ve anlamlı bir ilişki içindedir. Özetle finansal sürdürülebilirlik; büyüklükten anlamlı ve olumlu bir şekilde etkilenirken, PAR>90'dan anlamlı ve olumsuz etkilenmektedir.
Sonuç – Araştırma sonuçlarının dikkate alınması; Togo'daki mikrofinans aktörlerinin yanı sıra politikacıların ve donorlerin sektördeki faaliyetlerini daha iyi yönlendirmelerine yol açabilecektir.

Keywords

Finansal performans, finansal sürdürülebilirlik, Mikrofinans, Togo

References

• Adongo, J., & Stork, C. (2005). Factors Influencing the Financial Sustainability Of Selected Microfinance Institutions in Namibia. The Namibian Economic Policy Research Unit.
• Amersdorffer, F., Buchenrieder , G., & Bokusheva , R. (2015). Efficiency İn Microfinance : Financial And Social Performance Of Agricultural Credit Cooperatives İn Bulgaria. Journal of the Operational Research Society, 1(66), 57-65.
• Bogan, V. (2009). Capital Structure and Sustainability : An Empirical Study of Microfinance Institutions. . Department of Applied Economics and Management, 41.
• Boye , S., Hajdenberg , J., & Poursat, C. (2006). Le guide de la microfinance: Microcrédit et épargne pour le développement. Edition d’Organisation, Groupe Eyrolles.
• Bui, T. T. (2017). Factors Affecting Mİcrofinance Development In Vietnam. . Ph.D. Thesis, Universite Paris 13 Sorbonne Paris Cité.
• Christen , R., Rhyne, E., Vogel , R., & McKean. (1995). Maximizing The Outreach Of Microenterprise Finance : An Analysis Of Successful Microfinance Programs. USAID Program and Operations Assessment Report.
• Crombrugghe, A., Tenikue, M., & Sureda, J. (2008). Performance Analysis For A Sample Of Microfınance Institutions In India. Annals of Public and Cooperative Economics, 79(2), 269-299.
• Cull , R., Demirgüç-Kunt , A., & Morduch, J. (2007). Financial Performance And Outreach: A Global Analysis Of Leading Microbanks. The Economic Journal, 117(517), 107-133.
• Diagne , A., Zeller , M., & Sharma, M. (2001). Empirical Measurements of Household’s Access to Credit and Credit Constraints in Developing Countries : Methodological Issues and Evidence. IFPRI.
• El Kharti, L. (2013). Déterminants de la performance financière des institutions de microfinance (IMF) au Maroc: Analyse empirique. Université Paris-EST CRETEIL, Centre de Recherche en Economie Appliquée à la Mondialisation (CREAM).
• Fersi, M., & Boujelbéne, M. (2016). The Determinants of the Performance and the Sustainability of Conventional and Islamic Microfinance Institutions.
• Gadedjisso-Tossou , A., Bodjona , C., & Aboudou, M. (2021). The Influence of CSR Practices on the Financial Performance of Microfinance Institutions in Togo. International Journal of Economics and Finance, 13(2), 52 60. https://doi.org/.
• Hartarska , V., Shen , X., & Mersland , R. (2013). Scale economies and input price elasticities in microfinance institutions. Journal of Banking & Finance, 37(11), 118-131. Hartarska. (2004). Governance and Performance of Microfinance Institutions in Central and Eastern Europe and the Newly Independent States. World Development, 30(10), 627-643.
• Heng, S. (2015). Assessing Outreach and Sustainability of Microfinance Institutions in Cambodia. MSc Thesis, Ohio University.
• Hossain, M., & Khan, M. (2016). Financial Sustainability of Microfinance Institutions (MFIs) of Bangladesh. Developing Country Studies, 6(6), 69-76.
• Ibrahim, A. (2015). Determinants of Microfinance Sustainability : An Empirical Analysis of Microfinance Institutions in Togo. International Journal of Science and Research (IJSR), 6(4), 190-196.
• Kanyenda, T. (2019). An Assessment Of Factors Affecting The Financial Performance Of Microfinance İnstitutions İn Zimbabwe. [Bachelor Thesis], Chinhoyi University of Technology.
• Kereta, B. (2007). Outreach and Financial Performance Analysis of Microfinance Institutions in Ethiopia. African Economic Conference United Nations Conference Center (UNCC). Addis Ababa, Ethiopia.
• Khandker, Shahidur, R., Khalily, Baqui, Khan, & Zah. (1995). Grameen Bank: Performance and Sustainability. Discussion Paper (306), Washington, D.C.: World Bank.
• Lafourcade , A., Isern, J., Mwangi , P., & Brown. (2005). Overview Of The Outreach And Financial Performance Of Microfinance Institutions İn Africa. MIX/CGAP.
• Ledgerwood, J. (1999). Microfinance Handbook : An Institutional And Financial Perspective. . The World Bank, Washington, D.C.
• Meyer, J. (2002). Track record of financial institutions in assessing the poor in Asia. ADB research institute paper.
• Mustafa, A. (2017). Factors that impact microfinance institutions' performances in Sudan. Universiti Teknologi Malaysia.
• Ndione, M. (2020). Déterminants de la performance des institutions de micro-crédits : UEMOA et BRICS. Université Bourgogne Franche-Comté.
• Quayes, S. (2012). Depth of outreach and financial sustainability of microfinance institutions. . Applied Economics, 44, 3421-3433.
• Quayes, S. (2015). Outreach and performance of microfinance institutions : A panel analysis. Applied Economics, 47(18), 1909-1925.
• Quayes, S. (2015). Outreach and performance of microfinance institutions : A panel analysis. . Applied Economics, 47(18), 1909-1925.
• Rai, A., Sandhya, R., & Ghaziabad, L. (2012). Factors Affecting Financial Sustainability of Microfinance Institutions. . Journal of Economics and Sustainable Development, 3(6), 1-9.
• Schäfer, K., & Fukasawa, Y. (2011). Factors Determining the Operational Self-Sufficiency Among Microfinance Institutions. Advances in Business Research, 2(1), 172-178.
• Tehulu, T. (2013). Determinants of Financial Sustainability of Microfinance Institutions in East Africa. . European Journal of Business and Management, 5(17), 152 158.
• Usman , M., Ahmed , S., Mehmood , T., & Hak, N. (2016). Determinants Of Financial Sustainability Of Microfinance Institutions In Pakistan. Journal of Contemporary Issues in Business Research, 5(4), 92-99.
• Wale, L. (2009). Performance Analysis of a Sample Microfinance Institutions of Ethiopia. International NGO Journal, 4(5), 287-298.
• Zerai, B., & Rani, L. (2011). Is There a Tradeoff between Outreach and Sustainability of Microfinance institutions ? Evidence from Indian Microfinance Institutions (MFIs). Research Journal of Finance and Accounting, 2(11), 32-41.