Financial sustainability of microfinance institution in the Philippines: A study on the provision of sustainable services and poverty reduction through financial inclusion

Date of Publication

2015

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Management of Financial Institutions

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Kenneth Lagman Yumang

Defense Panel Chair

Andriel Umali

Defense Panel Member

Regina Aseron

Michael Ricafort

Abstract/Summary

This research paper mainly identifies the significant factors that determine the financial sustainability of microfinance institutions (MFIs) in the Philippines. In line with identifying the said determinants, this paper also examines whether a trade-off exists between outreach to the poor, which is an indicator of financial inclusion and efficiency of Philippine MFIs. Hence, this paper uses a stochastic frontier analysis (SFA), specifically the Battese and Coelli (BC) Model to examine whether there is a trade-off between outreach to the poor and efficiency of Philippine microfinance institutions (MFIs), and both binary and ordered probit regression to identity the significant determinants of financial sustainability of these MFIs.

Using a sample of 146 observations, consisting of 30 Philippine MFIs, over a period of 12 years (2003-2014), the results of the study show that the significant factors that affect the financial sustainability of MFIs in the Philippines are loans intensity and credit risk, positively by loans intensity represented by the ratio of gross loan portfolio to total assets, and negatively by credit risk represented by the portfolio at risk greater than 30 days. Moreover, outreach and efficiency of Philippine MFIs are positively associated as represented by average loan balances. The study also documents the insignificance of female borrowers as a strong contributor to inefficiency unlike most studies.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU20481

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

iv, 99 leaves : illustrations ; 28 cm. + 1 computer optical disc ; 4 3/4 in.

Keywords

Financial institutions--Philippines

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