Journal of Economic and Business Management
International Journal of Economic and Business Management
Vol. 4(1), pp. 11-20, January, 2016.
Full Length Research
Severity of risks in microfinance Institutions in Ethiopia: the study on microfinance institutions in Ambo town
Daniel Tadesse Tulu
Ambo University, department of Marketing, Ethiopia. E-mail: email@example.com
Accepted 31 January 2016
The study is
undertaken to assess the severity of the risks that microfinance
institutions in Ethiopia come across while doing business focusing on
those operating in Ambo area. Both quantitative and qualitative research
methods were employed. Primary data was collected through adopted
Microfinance Banana skins questionnaires and secondary data was
collected through brochures and written materials from the institutions.
Statistical package for social sciences (SPSS) was employed to analyze
the data gathered via questionnaire and used to show risk levels. The
result from the study revealed that microfinance institutions in Ambo
area are affected by risks internal and external to the institutions
which comprise strategic, financial and operational risks. Credit risk
is identified as risk with high severity in affecting the performance of
the institutions, followed by weak accounting systems, liquidity risk,
staffing and lack of technology management. Competition and over
indebtedness risks are also identified as low severe risks that affect
the well performance of the institutions. Hence, these risks should be
handled by developing appropriate risk management framework so that
performance of the institutions is fostered.
Cite This Article As: Tulu DT (2016). Severity of risks in microfinance Institutions in Ethiopia: the study on microfinance institutions in Ambo town. Inter. J. Econ. Bus. Manage. 4(1): 11-20.