research papers on microfinance in sri lanka

Microfinance Models and Challenges in Sri Lanka.

• Faculty of Business Studies
• Research Papers
• Department of Finance and Accountancy

Show simple item record

Files in this item

This item appears in the following collection(s).

• Department of Finance and Accountancy [68]

All Collections

• Communities & Collections
• By Publication Date
• Document type

This Collection

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

Determinants of Microfinance Loan Default: An Empirical Investigation in Sri Lanka

2019, South Asian Journal of Social Studies and Economics

The purpose of this research is to explore the factors that influence microfinance loan default in Sri Lanka. Both a deductive and a quantitative approach were employed. A structured questionnaire was designed by 5 Likert-scale. Questionnaires were distributed among 133 microfinance loan borrowers in the region of the Matugama Divisional Secretariat using convenient sampling. SPSS version 22 used to perform the exploratory factor analysis. The findings of this study confirmed three factors useful to explain microfinance loan default in Sri Lanka. These are the actions of the Microfinance Institute to control loan defaulting; the characteristics of the borrowers’ family and loan group; and macro-economic issues. The findings of this study could be used by managers of Microfinance Institutes to manage their credit risk and customer portfolio. Certain policy implications such as possibility of granting access to Credit Information Bureau of Sri Lanka, accessing credit history of custom...

Related Papers

Journal of Commerce & Accounting Research

Publishing India Group

The number of microfinance institutions (MFIs) entering the microfinance sector increasing gradually, leading to the cutting of corners in matters of consumer protection-multiple lending, over-indebtedness, and consequently coercive collection practices. Because of these practices, defaults in microfinance loans have been increased significantly in the last decade. This research paper has studied the causes of default of microfinance loan by the adoption of cross-sectional descriptive research design. For primary data collection, a structured questionnaire was formed with thirty-seven questions. For selecting samples, cluster sampling was used initially and had taken Gujarat state as one of the clusters. Next, MFIs were selected from this cluster with certain criteria and then microfinance loan defaulters of these MFIs were chosen for the survey. A total of four hundred and sixty-three microfinance loan defaulters of MFIs were surveyed. Next, the paper evaluates the combination of different variables that could have led to loan default through cross-tabulation Next, the paper has studied the association of borrower's factors with causes of default and the loan amount to understand different characteristics that lead to a specific cause of default. Lastly, to identify the variables considered for deciding the loan amount. The frequency analysis showed that the major cause of default was another debt which highlighted the situation of multiple lending where different MFIs lends to the same borrower. The results of cross-tabulation and hypotheses tests show that MFIs were not considering demographic and economic factors of the borrower while deciding the loan amount and rather it was related majorly to the number of borrowing cycles. By analyzing the results of the study, the paper identifies preventive measures to control microfinance loan defaults.

Rathiranee Yogendrarajah

This study provides an empirical analysis of microcredit repayment in Sri Lanka. Multi-stage stratified random sampling technique was used to collect the data from 337 women members of microfinance institutions (MFIs) in the study area that were five districts of Jaffna, Kilinochchi, Mannar, Mullaitivu and Vavuniya have been selected for gathering information regarding repayment of microcredit loan and the factors which influence on repayment which were amount of loan, loan interest, decision making in household level, control over resources and loan management. Linear multiple regression was used to find out the variables that affected micro credit repayment. However the variables of decision making influenced lower level than other variables and control over assets significantly negatively influenced on repayment and the other variables that significantly influenced on repayment of loan (P<0.05) at 0.05 level. It is concluded from the results that if women have more decision ma...

caeser kamuti

ABSTRACT Microfinance refers to the provision of financial services like savings, money transfers, payments, remittances, and insurance to the poor based on market-driven and commercial approach. However many microfinance practices today still focus on micro-credit; that is providing the poor with small credit with the hope of improving their labour productivity and thereby lead to increment in household incomes. Microfinance products tend to be for smaller monetary amounts than traditional financial services. The design of products and services offered fit the financial needs of individuals, households and enterprises which can change significantly over time, especially for those who live in poverty. The main objective of the study was to establish why micro finance institutions have a higher default rate as compared to the formal banking sector. This research adopted a case study research design where Jitegemea Credit Scheme was used to establish why micro finance institutions have a higher default rate as compared to the formal banking sector. The study relied on primary data collected from the credit department of the organization with the aim of establishing how the organization selects and appraises potential clients for disbursement of funds and how the various aspects of clients affect their possibility of default.The findings revealed that those clients aged between 30-40 years who have an average of 2 children and have a O’level education take up loans more frequently from MFIs since this niche of clients is active in terms of business and other economic activities therefore in need of financial support. Secondly, the findings indicate that few borrowers had been supervised on loan utilization which is a pointer as to why default rates could be higher in MFIs. The result of this study concluded that inadequate supervision of borrowers on loan utilization and loan repayment lead to default of repayments. Supervision is an important aspect since it compels borrowers to be committed; a fact expressed by borrowers who said they considered supervision important in loan repayment. In order to minimize default in repayments, MFIs should ensure that whoever they are lending to meets a minimum threshold in asset value before loans are accessed. The study recommends that MFIs should educate the borrowers on the need to spend less on household consumption so as to reduce on default as well as borrowers being able to save their money since a good number of the borrowers did not use the loans t for the intended. Such diversions were the reason why they were unable to keep up to date in their repayments. The study further recommends that in order for MFIs to reduce default in loan repayments, they should monitor the borrowers regularly so as to ensure that they use the loans they received for the agreed and intended. This can they can do through getting regular account statements from borrowers as well as physically visiting the borrowers to monitor and evaluate the progress of their loan projects

Evans Brako Ntiamoah

Microfinance institutions have been extending loans to different deficit units in Ghana and this study aimed at addressing the following issues: identifying the causes of loan default and the processes involved in granting loan by Microfinance institutions in Ghana. The convenient and purposive sampling techniques were employed to select respondents to provide answers to questionnaires. The population of the survey constituted the management and non-management staff and customers of some selected microfinance institutions in Ghana. Hypotheses of the study will be analyzed using correlation and regression. Results of the study show that there are high positive correlation between the constructs of loan default causes and how loans are granted. Keywords: Loan Default Rate, Monitoring and Repayment, Microfinance institutions.

Henry Ajagbawa

International Journal of Accounting, Finance and Risk Management

Kassahun Bekele Tegene

Global Journal of Management and Business Research

Cyrus Mwangi

This study examined the performance of Microfinance Institutions (MFIs) in Kirinyaga County and particularly the women groups affiliated to the Institutions because they are registered as social welfare groups,(save for deposit taking MFI’S) and therefore they are not regarded as financial institutions and hence not registered at all and are also not under the control of Central Bank of Kenya, or the Micro finance regulatory body The Research targeted 300 employees of MFIs under study. The findings indicated that the operations of MFIs have grown remarkably due to expansion in the informal sector activities coupled with bank’s reluctance to fund the evolving small and medium enterprises. On the other hand, financial services provided by MFIs have not been given any publicity or indicated among financial institutions in the official financial statistics.

American Journal of Management Science and Engineering

Hundessa Adugna Yadeta , Diriba Marga

The study was conducted on the assessment of causes of loan default in Wasasa Microfinance S.C Sabata town branch office in order to indicate information that enables to ensure its future sustainability. Both questionnaire and interview guide were used to collect data which was analyzed using descriptive analysis. The survey made on 99 clients and 10 employees shows that the majority of clients are females which is prioritized by the institution to empower poor female household heads. More than half clients of the institution work in their own business generating income of 5000-50,000 birr per month. Based on the result, poor loan appraisal, Burden of interest, operational inefficiency and Poor customer handling are the four major internal causes of the loan default while political instability, poor business plan, existence of illegal business and price fluctuation are four major external causes of loan default. Wasasa Microfinance uses different mechanisms to control default like negotiation with customers, writing letter of warning to defaulters, penalizing according to loan agreement and taking to court. It is recommended that Wasasa Microfinance S. C control different causes of loan default by awareness creation through training both customers and employees, and increasing institutional efficiency in operational procedures and policies. It is better for the institution to focus on capacity building, incentivizing the model staffs and using clear monitoring and evaluation system.

Journal of Advances in Mathematics and Computer Science

Ernest Boateng

RELATED PAPERS

Questions de communication

Fransiska Louwagie

Dariusz Sobala

Violência de gênero contra mulheres: suas diferentes faces e estratégias de enfrentamento e monitoramento

Maria Gabriela Hita

PengabdianMu: Jurnal Ilmiah Pengabdian kepada Masyarakat

Feni Iranawati

Proceedings of the 17th LACCEI International Multi-Conference for Engineering, Education, and Technology: “Industry, Innovation, and Infrastructure for Sustainable Cities and Communities”

Journal of Economics and Public Finance

Sterling Raskie

International Journal of Radiation Oncology*Biology*Physics

Pavel Stavrev

Ulla Væggemose

Tydskrif vir Letterkunde

Hendrik Petrus van Coller

CEKLI SETYA PRATIWI

Revista da Associação Médica Brasileira

Verônica Franco Parreira

FMC - Formación Médica Continuada en Atención Primaria

julian escobar sanchez

arXiv (Cornell University)

Bivas Dinda

The monitoring of public opinion economic&social changes

Anastasia Nikolskaya

جيولوجيا الخامات والاستكشاف المعدني

Mohsen Alshagdari

Scientific Reports

Giulia Del Manzo

Health information and libraries journal

Joanne Marshall

Psychoterapia

Katarzyna Sass

Bisma (Bisnis dan Manajemen)

Sentot Imam Wahjono

Joan Balanya

THE 9TH INTERNATIONAL CONFERENCE OF THE INDONESIAN CHEMICAL SOCIETY ICICS 2021: Toward a Meaningful Society

Dwi Hawa Yulianti

The Mathematics Enthusiast

Eric "Rico" Gutstein

Chemistry: A European Journal

Rahul patil

FEBS Letters

M. Pastor-anglada

RELATED TOPICS

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

Search form

• Vision, Mission & Values
• Corporate Structure
• Principal Officers
• Departments
• Bank Headquarters
• Regional Offices
• Library & Information Center
• Centre For Banking Studies
• The Economic History Museum of Sri Lanka

Exter Report

• Economic and Price Stability
• Monetary Policy Framework
• Policy Rates and Open Market Operations
• Statutory Reserve Requirement
• Other Policy Instruments
• Monetary Policy Committee
• Stakeholder Engagement Committee
• Monetary Policy Announcement Dates
• Monetary Policy Advance Release Calendar

Monetary Policy Review

• Major Functions
• Banking Sector
• Non Bank Finance and Leasing Sector
• Primary Dealers
• Microfinance Sector
• Money Broking Industry
• Macroprudential Surveillance
• Sustainable Finance
• Financial Markets Overview
• Interbank Call money Market
• Domestic Foreign Exchange Market
• Government Securities Market
• Corporate Debt Securities Market
• Equity Market
• Development Finance and Access to Finance
• Payment and Settlement Systems
• Credit Information
• Laws and Regulations
• Financial Instuments Overview
• Financial System Stability Committee
• Financial System Oversight Council
• Financial Stability Review

• Current Note Series
• Coins in Circulation
• Commemorative Coins and Notes
• Security Features of Notes
• Currency Management
• History of Currency in Sri Lanka
• Public Currency Exchange Counter

Currency Museum

• Unfit, Altered and Mutilated Bank Notes
• Exchanging Damaged Notes
• Counterfeit Prevention
• Using Bank Note Images
• More Information

• Central Bank of Sri Lanka Act
• Monetary Law Act
• Non-Banking
• Micro Finance
• Foreign Exchange
• Employee Provident Fund (EPF)
• International Operations
• Payments and Settlements
• Domestic Operations
• Public Debt
• Deposit Insurance and Resolution
• Financial Consumer Protection
• Finance Company
• Leasing Establishment
• Primary Dealer
• Consultation Papers for Public Comments
• Real Sector
• External Sector
• Fiscal Sector
• Monetary Sector
• Financial Sector
• Daily Price Report
• Daily Indicators
• Weekly Indicators
• Monthly Indicators
• Monthly Bulletin
• Monthly Trade Bulletin
• Macroeconomic Chart Pack
• Sri Lanka Prosperity Index
• Workers' Remittances and Labour Migration
• Gross Domestic Product
• Purchasing Managers' Index
• Business Outlook Survey
• Survey on Credit Supply
• Condominium Market Survey
• SDDS National Summary Data
• Economic Data Library
• External Sector Performance
• Open Market Operations
• Purchasing Managers Index Survey
• Non-Bank Financial Institutions
• Government Securities
• Press Conferences

• Monetary Policy Report
• Annual Economic Review
• Financial Statements and Operations
• Annual Report
• Financial Soundness Indicators
• Recent Economic Developments
• Central Bank of Sri Lanka Balance Sheet
• Other Financial Publications
• News Survey
• Econ-Icon Quiz Program
• Thakshilawa
• Statistical Publications
• Payments Bulletin
• Staff Studies
• Research Conference Proceedings
• Public Awareness
• Other Publications
• Conferences, Seminars and Workshops
• Information Series

You are here

External sector performance - march 2024.

The merchandise trade deficit narrowed in March 2024, (year-on-year), supported by a notable improvement in export earnings, the highest earnings recorded since August 2022.

The services sector also recorded a notable net inflow in March 2024 mainly from tourism, while sizeable inflows were recorded in terms of sea transport (freight) services as well.

Workers’ remittances remained elevated in March 2024 in line with the seasonal trend.

Foreign investments in the Colombo Stock Exchange (CSE) and the government securities market recorded monthly net outflows in March 2024.

Gross Official Reserves stood at US dollars 5.0 billion by end March 2024, a notable increase compared to the US dollars 4.4 billion as at end 2023.

The Sri Lanka rupee demonstrated a notable appreciation trend against the US dollar during the month of March 2024.

Published Date: 

• Right to Information
• Forms & Downloads
• Tender Notices

More Services

• Employees' Provident Fund
• Public Debt Management
• Department of Foreign Exchange
• Center for Banking Studies
• Financial Intelligence Unit
• Regional Offices of CBSL

Useful Sites

• Ministry of Finance
• Department of Census and Statistics
• Institute of Bankers of Sri Lanka
• International Monetary Fund
• Colombo Stock Exchange
• Credit Information Bureau

© Central Bank of Sri Lanka, 2018. All Rights Reserved

Designed and Developed by IT Department, CBSL

• Default Style
• Green Style
• Orange Style