Impact of Credit Risk Management on Performance of Microfinance Institutions (Special Reference to Mannar District, Sri Lanka)
No Thumbnail Available
Date
2020
Journal Title
Journal ISSN
Volume Title
Publisher
Uva Wellassa University of Sri Lanka
Abstract
Credit risk management in microfinance institutions has become more important not only
due to the financial crisis that the industry is experiencing currently but also a due to the
crucial concept which determines the financial and social performance. The objective of
this study was to identify the impact of credit risk management on the performance of
microfinance institutions and to identify the significant factor of credit risk management
which affects the performance of microfinance institutions. The researcher has used a
controlled environment, credit risk assessment, monitoring, and control activities as the
key elements in managing credit risk. The study used a purposive sampling technique to
select a sample of fifty employees from ten microfinance institutions in the Mannar
district. Primary data were collected by distributing five-point Likert scale questionnaires,
which consisted of thirty questions from two dependent variables and four independent
variables. Descriptive statistics, correlation analysis, and multiple regression analysis
were used to analyze the data. The study identified that credit risk management has a
positive relationship with the performance of microfinance institutions concerning the
Mannar district. Moreover, it ensures that monitoring had a significant impact on
financial performance with the highest value of 0.59, and control activities had a
significant impact on social performance with the highest value of 0.34. Finally, the study
suggests to establish overall credit control and to have a system for monitoring the
condition of individual credits.
Keywords: Micro finance institutions, Credit risk management, Financial performance
and Social performance
Description
Keywords
Business Management, Financial Management, Marketing