Determinants Of Operational And Financial Self-sufficiency An Empirical Evidence Of Ethiopian Microfinance Institutions

An enduring problem facing MFI is how to attain financial and operationalrnsustainability. Several studies have been conducted to determine the factors affectingrnthe financial and operational sustainability of MFIs. However, there are insufficientrnstudies conducted on this area in Ethiopia. Therefore, this study was conducted to fillrnthe gap. This study is based on quantitative research approach using panel datarnregression as the main data analysis technique. The study was based on a six years‟rnsecondary data obtained from the mix-market database for twelve selected MFI inrnEthiopia. The study found that average loan balance per borrower, size of a MFI,rncost per borrowers and yield on gross loan portfolio affects the operationalrnsustainability of Ethiopian MFIs significantly. Whereas cost per borrower, numberrnof active borrowers and yield on gross loan portfolio affect their financialrnsustainability. The Study also found that MFIs in Ethiopia are operationally self-rnsufficient while they are not financially self sufficient. This study recommendsrnmicrofinance institutions to consider more numbers of borrowers, find ways ofrnserving the borrowers at the lowest possible cost, be able to utilize their short termrnassets to generate more cash and financial revenues, they should increase the loanrnsize, and finally it has been recommended that they should increase the value of theirrntotal assets

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