Financial performance of microfinance institutions in Kosovo

Abstract

This article seeks to investigate the determinants of financial performance of microfinance institutions in Kosovo over the period of 2007-2016. The data has been taken from twelve microfinance institutions in Kosovo. The dependent variables used as proxies for microfinance institutions' (MFI) performance are Operational self-sufficiency (OSS), Return on Assets (ROA) and Profit Margin (PM). ROA and PM are widely used indicators to analyse financial performance or profitability of MFI. The findings of this study show that the most important factor which has strong impact on financial performance of MFIs in Kosovo is high interest rate on loans. Our results show that the age of MFI is the determinant that influences its financial performance. It can also be noted that MFI with better governance are those that are members of financial associations.

Role of microfinance institutions for developing women entrepreneurship – the case study of Kosovo

“…Microfinance as a financial service provides access to financial services for low-income and unemployed people. It has been quite successful in reducing poverty and promoting economic development (Shkodra, 2019). This is also argued in (Fidrmuc & Kostagianni, 2015) who found that allowing for the IMF assistance to affect growth with a lag is enough to obtain a positive impact on growth.…”

Comparative analysis of cooperative & non-cooperative farmers in Kosovo

“…Kosovo has capacity in having advantages in various agricultural sectors (fruits and vegetables), yet needs to exceed many challenges and difficulties, mostly owing to the poor production and competitive capacity (Beluhova-Uzunova & Lubeniqi, 2019). Some of the difficulties confronted by Kosovo's farmers are lack of coordination, low level of education and training (KAS, 2014), advisory service, poor knowledge in the usage of technology, high interest rate on loans (Shkodra, 2019), insufficient experience, low technical efficiency, limited market access, and particularly, trade barriers from neighbor countries. The main concern is low level of cooperation between farmers due to the lack of trust in the cooperative institutions.…”

Factors determining the operational self-sufficiency of microfinance institutions

“…Some of the more recent studies, derived similar conclusions. Study conducted by Shkodra (2019) showed that for MFIs located in Kosovo, size, year, inflation, and GDP have important influence on their financial performance. Study also implies that among most significant coefficients, to reflect financial performance is certainly gross portfolio yield which is revealed as positively significant across all three financial performance indicators, namely OSS, Return on Assets (ROA) and Profit Margin (PM).…”