What affects portfolio yield of microfinance institutions? Evidence from Bangladesh
Document Type
Article
Publication Date
1-1-2018
Abstract
Despite the success and rapid growth of the microfinance industry worldwide, there has been very little sign of any abatement of the high interest rates. High interest rates in microfinance rescind consumer benefits and limit the outreach of microfinance institutions (MFIs). Hence, the aim of this study is to identify the determinants of portfolio yield by examining a longitudinal data of 169 MFIs from Bangladesh. The data are collected from the annual reports of the Microcredit Regulatory Authority (MRA) and cover the period from 2009 and 2014. Based on empirical results, the study found that sources of funds are optimally used in the microfinance industry in Bangladesh. Among other institutional characteristics and macroeconomic factors, only operating cost and inflation were found to be positively significant to portfolio yield, supporting the conventional views. Policy implications are further discussed.
Keywords
portfolio yield, microfinance institutions, sources of funds, macroeconomic factors, Bangladesh
Divisions
Faculty_of_Business_and_Accountancy
Funders
Financial support [grant number PD002-2017] from the Centre for Poverty and Development Studies (CPDS), University of Malaya, Malaysia
Publication Title
African Journal of Science, Technology, Innovation and Development
Volume
10
Issue
3
Publisher
Taylor & Francis