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 International Journal of Economic and Business Management
 

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 International Journal of Economic and Business Management

Vol. 4(1), pp. 11-20,  January, 2016.

ISSN: 2384-6151

DOI: 10.14662/IJEBM2016.001

 

 

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: danitadesse@ymail.com

 

Accepted 31 January 2016

Abstract

 

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.

Key words: risk severity, Credit risk, liquidity risk, staffing, over indebtedness risk

 

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.

 

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