IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 10 NO. 6 2024
DOI: 10.56201/ijbfr.v10.no6.2024.pg13.25

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Deposit Mobilization and Financial Performance of Microfinance Banks in Nigeria

Obim, Edim Ndifon and Prof Ezeudu, Jude Ikenna

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Abstract

The purpose of the study was deposit mobilization and financial performance of microfinance banks in Nigeria. The specific objectives were to: investigate the effect of time deposits on the financial performance (ROA) of microfinance banks in Nigeria; ascertain the effect of microfinance bank loans on the financial performance (ROA) of microfinance banks in Nigeria; assess the effect of real interest rate on the financial performance (ROA) of microfinance banks in Nigeria; and examine the effect of gross capital formation on the financial performance (ROA) of microfinance banks in Nigeria. This study utilized the exploratory research design to empirically analyze the effects of deposit mobilization on the financial performance of microfinance banks in Nigeria. Secondary data, time-series and cross-sectional data were used in the study. Data for the study were gathered from annual reports of various microfinance banks in the selected states in Nigeria, as well as institutional sources like the CBN statistical bulletins, and the NDIC reports and records. Panel data analysis was employed in the study. From the result of these analyses, the findings are summarized as follows: there was a significant negative effect of time deposit on the financial performance of microfinance banks in Nigeria, there was a non-significant positive effect of microfinance bank loans on the financial performance of microfinance banks in Nigeria, and there was a significant positive effect of both the real interest rate and the gross capital formation on the financial performance of microfinance banks in Nigeria. The study recommended that microfinance banks should develop more aggressive strategies such as prize-linked savings, etc towards marketing as well as mobilizing more deposits, which are indispensable tools towards the profitability of the banks. It was also recommended that microfinance banks should facilitate financial settlement by influen

keywords:

Deposit mobilization, time deposits, microfinance bank loans, real interest rate,

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