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What affects portfolio yield of microfinance institutions? Evidence from Bangladesh

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  • Md. Aslam Mia
  • Md. Sohel Rana

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.

Suggested Citation

  • Md. Aslam Mia & Md. Sohel Rana, 2018. "What affects portfolio yield of microfinance institutions? Evidence from Bangladesh," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 10(3), pages 345-353, April.
    • Handle: RePEc:taf:rajsxx:v:10:y:2018:i:3:p:345-353
    DOI: 10.1080/20421338.2018.1463652
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    Cited by:

    1. Farah NAZ & Sarah SALIM & Ramiz ur REHMAN & Muhammad Ishfaq AHMAD & Rizwan ALI, 2019. "Determinants of financial sustainability of microfinance institutions in Pakistan," Upravlenets, Ural State University of Economics, vol. 10(4), pages 51-64, September.
    2. Evren Tok & Abdurahman J. Yesuf & Abdulfatah Mohamed, 2022. "Sustainable Development Goals and Islamic Social Finance: From Policy Divide to Policy Coherence and Convergence," Sustainability, MDPI, vol. 14(11), pages 1-23, June.

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