An empirical investigation into the risk management strategies of MFIs in Cameroon

Akanga, Fidelis; Sha', Widin Bongasu; ven, N.A.; Tauringana, Venancio

doi:10.1504/ajaaf.2020.111729

Cited by 2 publications

(2 citation statements)

References 41 publications

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“…The risks that emanate in the financial context and specifically among MFIs come from various sources such as financial uncertainty, legal liabilities, strategic management errors, accidents, natural disasters and global events like a health crisis/ pandemic. Akanga et al (2020) and Steinwand (2000) note that risk managers among MFIs should manage risks to acceptable levels or limits that are set by the institutions.…”

Section: Empirical Reviewmentioning

confidence: 99%

Impact of income diversification strategy on credit risk and market risk among microfinance institutions

Duho

Forson

2021

JEAS

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PurposeThis study explores the effect of income diversification strategy on credit risk and market risk of microfinance institutions (MFIs) in Ghana as an emerging market.Design/methodology/approachThe study is based on quarterly data of averagely 271 MFIs that have operated from 2016 to 2018. The dataset is unbalanced and pooled cross-sectional with 3,259 data points. The study measures the diversification strategy using income diversification indices, and accounting ratios to measure the other variables. We utilised the weighted least squares (WLS) approach to explore the nexus.FindingsThe findings show that income diversification is associated with better loan quality and credit risk management. Market risk increases with the level of income diversification of microfinance firms. It is evident that large MFIs can manage their credit risks well and can have a low default rate, depicting an overall U-shaped nexus. On the other hand, the effect of size on market risk is an inverted U-shaped. The effect of asset tangibility on credit risk is positively significant while the effect on market risk is negatively significant. High profitability enhances credit risk management leading to lower loan losses while in the case of diversified and profitable MFIs, they tend to invest more in government securities. The results suggest that MFIs that hold more cash and cash equivalents tend to have high loan loss provision and more government securities suggesting much attention should be paid to optimal cash management.Practical implicationsThe results throw light on the credit risk and market risk profile of the firms and the effect of diversification strategies on them. The findings are relevant for effective macroprudential regulation, market regulation and prudential regulation of the microfinance sector.Social implicationsThe findings reveal the nature of income diversification strategy of MFIs in emerging markets such as Ghana, pointing out how they affect the risk exposure of MFIs that lend to the pro-poor population.Originality/valueThis is a premier formal assessment of the nexus between income diversification strategies and risk management among MFIs that serve the pro-poor population in the emerging market context.

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Section: Empirical Reviewmentioning

confidence: 99%

Impact of income diversification strategy on credit risk and market risk among microfinance institutions

Duho

Forson

2021

JEAS

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“…Hence, there is a mismatch between the demand for and supply of financial services in microfinance industry. (Haneef et al, 2015;Akanga et al, 2020). In addition, Staschen and Nelson (2013) highlighted that there were three primary challenges that affect the financial inclusion which include supply and demand sides, and regulatory.…”

Section: Problems and Challenges Faced By Mfismentioning

confidence: 99%

A Proposed Integrated Islamic Crowdfunding - Microfinance (Iicm) Model for Poverty Reduction: A Case Study of Indonesia

Mohd Thas Thaker,

Bin Mohd Thas Thaker,

Bin Allah Pitchay

et al. 2021

Int. J. Is. Ec. Fi. Res.

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Poverty is a complex, multi-dimensional phenomena that has captured the attention of numerous scholars and agencies globally including OIC member countries. In order to address this alarming poverty problem, some of the OIC countries have adopted the institution of microfinance as a solution, including in Indonesia. In spite of its expansion, microfinance continues to face the problem of accessing affordable financing. Hence, this paper aims to attempt to offer a viable alternative model of source of financing which is known as Integrated Islamic Crowdfunding- Microfinance (IICM) model for microfinance clients in Indonesia. In order to achieve this objective, literature on the issues of accessing to finance faced by microfinance clients and crowdfunding are reviewed critically and used in the attempt of proposing an alternative model. The proposed model will assist microfinance institutions and clients of Indonesia in identifying sustainable financing source and a viable alternative model for poverty alleviation. Through this, Indonesia will play a leading role among the Muslim countries with the noble idea of Islamic crowdfunding and microfinance in poverty alleviation agenda. It enables policy makers to plan more effective plans/strategies to enhance the potential of Islamic crowdfunding among the Muslim countries in addressing issue of poverty in general.

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An empirical investigation into the risk management strategies of MFIs in Cameroon

Cited by 2 publications

References 41 publications

Impact of income diversification strategy on credit risk and market risk among microfinance institutions

Impact of income diversification strategy on credit risk and market risk among microfinance institutions

A Proposed Integrated Islamic Crowdfunding - Microfinance (Iicm) Model for Poverty Reduction: A Case Study of Indonesia

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