Microfinance banks in nigeria pdf

The result shows that the link between board size and profitability does not imply board size to increase profitability as number of shareholders has negative relationship with profit before tax. Rather, the result found a positive relationship between equity of MFIs and profit after tax, which means that the higher the equity of MFIs, the higher their profitability. Therefore, the study recommends that the MFIs should concentrate more on raising share capital as well as constituting efficient boards and committees for effective corporate governance that will result in the sustainability of the MFIs.

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Download This Paper. Remember me on this computer. Enter the email address you signed up with and we'll email you a reset link. Need an account? Click here to sign up. Download Free PDF. Nwalor Rapheal. A short summary of this paper. This study made use of quantitative secondary data from the Central Bank of Nigeria CBN statistical bulletin to carry out this study.

Empirical evidence from the study has shown that the activities of microfinance bank has the capacity to influence the entire economy if it is well coordinated. The implication of this finding is that if loans extended by the microfinance banks to the business sector do not increase it will not generate a corresponding increase in the growth of Nigerian economy.

This study therefore recommends that Microfinance banks MFBs should be front-liners of ethical and professional conduct by ensuring that soft loans are given to credible and promising entrepreneurs. Keywords: Microfinance banks, Investment, Economic growth, Inflation 1. The failure of conventional banking in Nigeria to meet the socio-economic complexities needs of the rural communities that consequently experience rapid growth and changes as well as government desire to reach rural areas with development gave rise to the emergence of community banks now microfinance banks as a way of providing financial answers to the low income earners or people so as to finance and improve their income generating activities, i.

Microfinance banks can be seen as an economic growth method intended to advantage the low income class of a given country like Nigeria, both rural and urban poor. More so, lack of access to credit has been identified as the reason behind the growing level of poverty in many developing countries. This further emphasizes the crucial role microfinance institutions play in economic growth especially in their service for unserved and underserved markets economically active person in rural and urban areas to help meet economic and development objectives which include to reduce poverty considered as the most important.

Create employment, help existing businesses to grow or diversify their activities, empower women and other disadvantaged groups and even encourage the growth of new businesses Khander, In , the Central Bank of Nigeria CBN formulated a new policy framework to enhance the access of financial services to micro-entrepreneurs and low income households who require such facilities soft loans and investable funds to expand and modernize their operations and their contribution to economic growth and development in Nige ia.

In , the Central Bank of Nigeria asserts that the emergence of microfinance institution has been largely due to the inability of the formal financial institutions to provide financial services to both the rural and urban poor.

In view of the need for financial inclusion, both the government and non-governmental agencies have, over the years, implemented series of microfinance programmes and institutions as well as governmental agencies providing policy strategies needed to improve the productivity of micro, small and medium scale enterprises.

Microfinance banks serves as part of the veritable vehicles for channeling funds for u al de elop e t. The number of microfinance banks, which was 66 in , peaked at in but fell drastically to in the year , and in it further fell to Microfinance banks in promoting and enhancing economic growth in Nigeria economy is faced with stiff difficulties like repayment problems, inadequate finance poor financing. In a bid or in an attempt to resolving the above identified problems salvaging microfinance banks in Nigeria, this research work is intended to provide answers to the following questions: how have credit institutions, especially microfinance banks, been able to impact positively on the level of economic growth in Nigeria in the midst of the aforementioned problems; do the rural and urban poor really use the loans and advances from microfinance banks for productive activities that will promote and enhance economic growth or do they use it for their personal needs i.

It is therefore imperative to investigate the role of microfinance banks in promoting economic growth in Nigeria. Table 3. Augmented Dickey-Fuller Unit Root test for stationarity. W Remark Level The F-ratio microfinance credit which was significant but negative, we of Both statistics F-ratio and R2 clearly showed an adequate overall 2.

Credit approved must be monitored to ensure that they goodness of fit of the data using Cochran-Orcutt model.

Further evidence of the goodness of fit of the model could References be seen in the value of Durbin-Watson D. W statistic which is approximately 2 suggesting that the residual of the model 1. Yunus M, Alan J. The banker to the poor: Micro- is not serially correlated. The most appropriate model was lending and battle against world poverty.

Public Affairs. Yunus M. Grameen Bank II: Lessons learn over a quarter 8. Khandker SR. Fighting poverty with microcredit: of a century. Oxford University: NY. Microfinance policy regulatory and supervisory 9. Swope T. Microfinance and poverty alleviation, Rolin framework for Nigeria. Abuja: CBN. UG Res J. Acha IA. It has been observed that the formation of strategic alliance has been a response to globalization and increase in uncertainty and complexity in the business environment Isoraite, The number of alliances has grown significantly in the past 30 years.

However, there is a dearth in literature on the effect of strategic alliance on market share especially in the Nigerian microfinance sub-sector. Reports show that MFBs have attempted to create some level of collaboration, however, this is yet to yield the expected result EFInA, According to Thom-Otuya and Chukuigwe , the Central Bank of Nigeria estimated in the unreachable clients of microfinance at 40 million.

A report by EFInA shows that, The number of the unbanked remains high. An EFInA report shows that of the A recent study detailing the market share of financial institutions like microfinance banks and deposit money banks have shown a decline in the number of customers served by MFBs, revealing a decrease from 2. Therefore, the objective of the study is to examine the effect of strategic alliance dimension on market share of selected Microfinance Banks in Lagos State, Nigeria.

On the other hand, an alliance is a relationship among people, groups or states that have joined together for mutual benefit or to achieve some common purpose Vaidya, According to Kuglin and Hook the word alliance can vary from industry to industry and company to company.

According to Ahmad the main purpose of alliance is to promote cooperation between enterprises. To narrow down on alliance, the study considered four dimensions — investment, marketing, venture and technical alliance. Investment Alliance Investment is a complex activity that describes the steps of decision-making followed by an investor regarding the appropriate time to invest in Dash, According to Kuglin and Hook , an investment alliance occurs when one company makes an investment in another company while at the same time developing an agreement to jointly market their products and services.

However, McCarthy says investment alliance takes place when companies pool resources to invest. Sharma suggests that the efficient allocation of the capital is the most important function, in modern time, of the management. Day and Nedungadi stressed that marketing ability requires complex and rich marketing knowledge and skills that will enable strategic alliance partners to coordinate their marketing resources and improve the overall performance of the alliance.

Sometimes, cooperation is used as a shortcut to knowledge that the partners would not be able to create within an acceptable time or at acceptable costs themselves, e. Venture Alliance According to Shishido, Fukud, and Umetani joint ventures takes the form of either a new company jointly established by the joint venture partners or organized as partnerships or contractual joint ventures based solely on a contractual relationship.

Joint venture shows common investments in which two or more persons, whether legal or natural, pool their labour and resources in order to achieve a common business, whose goal is to achieve some common business, and share profits and bear losses on flat parts Gijic, Dimitrijevic, Bogdanovic Wallace categories joint ventures into two equity and non-equity, while for equity joint venture a company is created, non-equity is based on contract.

Technical Alliance According to Niosi technical alliance generates a learning process that, in accelerating invention and innovation creates dynamic economics.

Kuhn and Yockey, proposed framework consist of three main interlinked components: knowledge management of the organization, knowledge management of the people and knowledge management of the infrastructure and processes. Market Share Market share is the proportion of sales in volume or value within a defined market and it is a measure of customer satisfaction McDonald, Market share appears to raise questions like: how broadly do we define our competitive universe?

Where in the value chain do, we capture our information? Market share can be calculated on the basis of relevant products in relevant area; as such, market shares are often available from market sources like companies estimates Dabbah, Buzzel says the most common explanation as to why market share leads to higher profitability are higher economies of scale, experience and market power.

Firms offering products that offer customers greater value enjoy gains in market share. Strategic Alliance and Market Share Bucklin and Sengupta opined that alliances provide a superior vehicle for gaining access to new complementary products and technologies.

While Chen and Tseng in studying marketing alliance found that partners having excellent resources and the potential for a mutually beneficial relationship are significant predictors of performance. A study by Oke revealed that marketing has become a major function in the banking industry as a result of increased competition brought about by bank consolidation and reforms. Bank staff involved in marketing activities in the post consolidation era have surpassed those in the pre consolidation era.

Kabuiya carried out a study on the influence of strategic partnerships on performance of co-operative bank and Safaricom limited. Content analysis was used to analyse the data and generate relevant results. Results show that mobile telephone organizations receive cost and product related benefits more than other benefits while banks got market related benefits more than other benefits.

Kibiego studied the influence of strategic partnerships on the performance of Kenyatta international convention centre. The study established that partnerships enhances new conference customer acquisition and retention, improves sales turnover and reduces cost of procurement. According to Das and Teng , resource-based view suggests that the rationale for alliances is the value- creation potential of firm resources that are pooled together.

The RBV talks about the organisational unique resources and capabilities which differentiates one organization from the other organizations in the similar industry. According to McIvor , firms can obtain complementary capabilities by merging with other firms when they do not have the necessary resources to invest in developing an activity or process.

Research Methodology This study adopted the survey research design to examine the effect of strategic alliance dimensions on market share of microfinance banks in Lagos state, Nigeria.

The study focused on five selected microfinance banks. With a sample size of , total enumeration technique was employed. The questionnaire used was validated and reliability established. The reliability of the research instrument was ascertained based on the Cronbach alpha measure of reliability which is not below 0. Primary data were generated through the use of questionnaires. Of the respondents, only was valid and useful. Results and discussion This dealt with the presentation and analysis of data collected.

Data from one hundred and sixty respondents were analyzed. The results of the multiple regression analysis are shown below Regression Result Source: Field Survey, Interpretation The table shows the multiple regression analysis results for the effect of strategic alliance dimensions investment alliance, marketing alliance, venture alliance and technical alliance on market share of selected microfinance banks in Lagos State, Nigeria.

The results revealed that out of all the dimensions of strategic alliance, only marketing alliance and technical alliance have significant effect on market share of selected microfinance banks in Lagos State, Nigeria.