Analysis of performance of sample microfinance institutions in Nigeria

ABSTRACT: This paper aims to analyze the performance of microfinance institutions (MFIs) from sustainability and outreach points of view. Random-effects GLS regression-Robust and Fixed-effects (within) regression- Robust analysis have been carried out employing a panel dataset of 64 MFIs in Nigeria. These MFIs willingly report their financial and operational data to Microfinance Exchange (MIX), a non-profit private institution with the objective of strengthening financial inclusion by disseminating performance information of microfinance sector worldwide. This study reveals that the MFIs will cover their cost without necessary increasing the number of loan officer for each borrower and the same time without increasing the number of female borrowers in their books. Also when the number of borrowers increases it is better for MFIs to increase their OSS. The result shows that PAR 30 will be properly checked and maintain with the increase of log of loan officer per borrower. The log of return on equity in our estimates shows significant when the MFIs ensures decrease in portfolio at risk past due 30 days and when CAR is getting down. Cost efficiency is significant when other variables are constant. The result depicts that the sample MFIs attain breadth of outreach while the cost per borrower reduces and lastly, for the MFIs to increase the depth of outreach PAR30 will also increase. Keywords: Microfinance Institutions, Operational Self-Sufficiency, Random-effects and Fixed-effects. …………………………………………………………………………………………………………………………………………………………………………………………………………