Rowland Seyram Koku Dabi, Nugraha, Disman, Maya Sari
The study examines the effect of capital structure on financial performance and sustainability of Microfinance Institutions in Ghana. We investigate the role of debt-to-equity ratio, equity-to-asset ratio, and deposit-to-loan ratio in guaranteeing financial performance and sustainability. We implement multiple regression methods to investigate the relationship between the observed performance indicators and a set of explanatory variables. The empirical analysis involves 51 Ghanaian MFIs reporting on the MIX market. We find strong empirical support for the notion that asset size is significantly and positively related to asset returns, self-sufficiency, and financial sustainability. Also, capital structure variables are strongly associated with profitability but exert insignificant impacts on operational self-sufficiency and financial instability of MFIs. The macroeconomic environment also matters to the profitability, self-sufficiency, and sustainability of MFIs. The ability of the MFIs to improve security and lessen the risk is critical in ensuring profit efficiency and self-sufficiency. © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
Faculty of Finance and Economics Education, School of Management Studies, Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia; Faculty of Management, Financial Management, Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia; Management Science, Public Finance, Economics and Finance Banking, Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia; Faculty of Economics and Business Education, Universitas Pendidikan Indonesia (UPI), Bandung, Indonesia
Research at a Glance
Register to unlock
Topics & SDG Alignment
Register to unlock
Collaboration
Register to unlock
Author Profile (Selected)
Register to unlock
References Overview
Register to unlock
Journal & Source
Register to unlock
Metadata & Integrity
Register to unlock