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Effect of credit management on the profitability of nepalese micro financial institutions / PunamBista
Title : Effect of credit management on the profitability of nepalese micro financial institutions Material Type: printed text Authors: PunamBista, Author Publication Date: 2020 Pagination: 111p. Size: GRP/Thesis Accompanying material: 15th Languages : English Abstract: Microfinance is the supply of loans, savings and other basic financial services to the poor. These owners of micro and small enterprises require a diverse range of financial instruments to meet working capital requirement, build assets, stabilize consumption, and shield themselves against risks (Ehigiamusoe, 2005). Microfinance banking is one of the measures of executive decision and strategic approach to the enhancement of capacity building, in human resources and industrial development of a social community environment. As a new separate strategic lifeline to the advancement of the business cycle and the aggregate level of market, micro credit support is seen to be a vital tool for enhancement of resource development (Obasi et al., 2014). According to Dandana and Nwele (2011), microfinance banking service that is well implemented play important role in modern society, as it provides micro credit loans to small and medium scale farmers and enterprises. It reduces poverty growth level and creates an enabling environment for social and political tranquillity. Because microfinance lending when properly managed benefits the poor rural farmers, small and medium scale enterprises.
Muasya (2013) empirically study the relationship between credit risk management practices and loans losses by commercial banks in Kenya. The study found that there is a significant negative relationship between credit risk management practices and loans losses in commercial banks in Kenya. Gul et al. (2013) examined the contribution of credit management on performance of small medium enterprises in Pakistan. The study revealed that number of days’ account, growth and firm size are directly related with profitability whereas number of days’ account receivable, number of day’s inventory, cash conversion cycle and debit ratio have and inverse relation with profitability. Sharma & Kumar (2011) investigated the effect of trade credit on profitability of Indian firms. The study revealed that trade credit and profitability is positively correlated in Indian companies.
The major objective of the study is to analyze the effect of credit management on the profitability of Nepalese Micro Financial Institutions. The specific objectives of the study are to examine the impact of client appraisal on profitability of Nepalese MFIs, to analyze the relationship of credit risk control and terms of credit on profitability of Nepalese Micro Financial Institutions, to analyze the relationship of collection policy with profitability of Nepalese Micro Financial Institutions and to assess the most influencing factor affecting profitability of Nepalese Micro Financial Institutions.
This study is based on primary data of 25 Micro Financial Institutions with 148 observations in Nepalese Micro Financial Institutions. To achieve the purpose of the study, structured questionnaire is prepared. The questionnaires were multiple choice, ranking scale. Likert scale and other demographic information were used to collect primary data. The Likert scale on different variables like client appraisal, credit risk control, collection policy and credit risk term measured in 5-point Likert scale and weighted mean value of each variable were used to examine the relationship between dependent and independent variables as for the study purpose.
The major conclusion of the study shows that client appraisal, credit risk control, collection policy and credit risk term have positive and significant impact on profitability of Nepalese Micro Financial Institutions. In addition, the most influencing factor affecting profitability of Nepalese MFIs is credit risk control followed by terms of credit and collection policy in Nepalese micro financial institutions.
Effect of credit management on the profitability of nepalese micro financial institutions [printed text] / PunamBista, Author . - 2020 . - 111p. ; GRP/Thesis + 15th.
Languages : English
Abstract: Microfinance is the supply of loans, savings and other basic financial services to the poor. These owners of micro and small enterprises require a diverse range of financial instruments to meet working capital requirement, build assets, stabilize consumption, and shield themselves against risks (Ehigiamusoe, 2005). Microfinance banking is one of the measures of executive decision and strategic approach to the enhancement of capacity building, in human resources and industrial development of a social community environment. As a new separate strategic lifeline to the advancement of the business cycle and the aggregate level of market, micro credit support is seen to be a vital tool for enhancement of resource development (Obasi et al., 2014). According to Dandana and Nwele (2011), microfinance banking service that is well implemented play important role in modern society, as it provides micro credit loans to small and medium scale farmers and enterprises. It reduces poverty growth level and creates an enabling environment for social and political tranquillity. Because microfinance lending when properly managed benefits the poor rural farmers, small and medium scale enterprises.
Muasya (2013) empirically study the relationship between credit risk management practices and loans losses by commercial banks in Kenya. The study found that there is a significant negative relationship between credit risk management practices and loans losses in commercial banks in Kenya. Gul et al. (2013) examined the contribution of credit management on performance of small medium enterprises in Pakistan. The study revealed that number of days’ account, growth and firm size are directly related with profitability whereas number of days’ account receivable, number of day’s inventory, cash conversion cycle and debit ratio have and inverse relation with profitability. Sharma & Kumar (2011) investigated the effect of trade credit on profitability of Indian firms. The study revealed that trade credit and profitability is positively correlated in Indian companies.
The major objective of the study is to analyze the effect of credit management on the profitability of Nepalese Micro Financial Institutions. The specific objectives of the study are to examine the impact of client appraisal on profitability of Nepalese MFIs, to analyze the relationship of credit risk control and terms of credit on profitability of Nepalese Micro Financial Institutions, to analyze the relationship of collection policy with profitability of Nepalese Micro Financial Institutions and to assess the most influencing factor affecting profitability of Nepalese Micro Financial Institutions.
This study is based on primary data of 25 Micro Financial Institutions with 148 observations in Nepalese Micro Financial Institutions. To achieve the purpose of the study, structured questionnaire is prepared. The questionnaires were multiple choice, ranking scale. Likert scale and other demographic information were used to collect primary data. The Likert scale on different variables like client appraisal, credit risk control, collection policy and credit risk term measured in 5-point Likert scale and weighted mean value of each variable were used to examine the relationship between dependent and independent variables as for the study purpose.
The major conclusion of the study shows that client appraisal, credit risk control, collection policy and credit risk term have positive and significant impact on profitability of Nepalese Micro Financial Institutions. In addition, the most influencing factor affecting profitability of Nepalese MFIs is credit risk control followed by terms of credit and collection policy in Nepalese micro financial institutions.
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Barcode Call number Media type Location Section Status 720/D PUN Thesis/Dissertation Uniglobe Library Philosophy & Psychology Available