MICROFINANCE PERFORMANCE IN A CHALLENGING ECONOMY: EVIDENCE FROM NIGERIA

Abstract

Following the challenges posed by increasing wave of global coronavirus pandemic, this study examines Microfinance performance in a challenging economy using monthly time series data from January, 2019 to June, 2021. The study employs the ARDL technique of analysis focusing on the indices of profitability, deposits, credits, interest rates and inflation using monthly data from statistical reports of Microfinance banks/institutions and Returns to Central bank of Nigeria and the Nigeria Deposit Insurance Corporation. The findings reveal that the profitability and economic conditions of microfinance banks/institutions degenerated during the period under study. The results also show that loan portfolio significantly increased during the period due to nonperforming status. Expansion degenerates and this affects the profit rate. The work recommends that the government through the Central Bank should provide adequate bail out or financial support to cushion the effect of the challenging environment on the loss of income to the institutions.