| Abstract: | The Ethiopian Micro Finance sector is characterized by its rapid growth, an aggressive drive to
achieve scale, a broad geographic coverage, a dominance of government backed MFIs, an emphasis
on rural households, strong focus on outreach and reaching the poorest of poor especially of
women. The main objective of this study is to analyze the financial performanceof Ethiopian MFIs
based on different measuring criteria by comparing against the bench mark. Although the actual
number of Ethiopian MFIs is around 35 as per NBE data base, it was accessed the data for 24 MFIs
and was selected 14 MFIs eligible to the current study sampling system. For data analysis it was
used one sample t- test and one-way ANOVA with Scheffe post hoc comparison tests.
The result of the study shows that Ethiopian MFIs are good performers in breadth of outreach that is
serving large number of borrowers, however, MFIs financial performanceon gross loan portfolio
(GLP) is very low compared to the bench mark. Regarding portfolio risk management Large and
Small MFIs are poor performers as they have higher value than the industry average whereas
Medium sized have lower value which is a good performer. On the other hand, large and small MFIs
allocate low loan loss provision although they have higher PAR. Ethiopian MFIs are good
performers on financial sustainability and profitability, efficiency and productivity. Ethiopian MFIs
are not properly levered compared to the industry average. All MFIs are good performers on GLP
to asset ratio, they allocated their portion of asset to loan portfolio, and thus MFIs are performing
better in their capital structure and asset allocation.The implication of the finding showed that large
and small MFIs have higher PAR value than the industry average,in addition large and small MFIs
served lower number of female borrowers andEthiopian MFIs are not properly levered and base on
the study it suggested that large and small MFIs to adjust their loan loss reserve as per their PAR
value and to serve better number of female borrowers and all MFIs better to be levered on their
capital structure. |
