Microfinance Innovations: A Tool for the Performance of Microfinance Institution in Buea Sub-Division, South West Region of Cameroon
Keywords:
Innovation, Performance, Microfinance Institutions, Buea Sub-Division, process innovation, Product innovation, Institutional InnovationAbstract
Microfinance Innovations are important for improving efficiency, scale and quality of financial services/products offer by Microfinance Institutions (MFIs) to low-income clients/ individuals or groups who otherwise would have no other access to financial services because they have little or no collateral or credit history. This study focuses on product innovation, process innovation, and institutional innovation which have eased business operations in financial institutions including MFIs. It is however not known whether these innovations have contributed to increase performance giving that performance of MFIs in Buea Sub-Division remains significantly low. The general objective of the study is to determine the effects of MFIs on the performance of microfinance institutions in Buea Sub-Division. The Specific objectives are to examine the effects of product innovation, process innovation and institutional innovation on the performance of MFIs in Buea Sub-Division. The study was guided by the theory of Financial Liberalization, theory of Induced Institutional innovation, Demand-Supply that established the relationship between microfinance innovations and performance. A total of 120 employees working with MFIs in Buea Sub-Division were purposively sampled with the use of structured questionnaire. After carrying out a descriptive analysis of the data, the Ordinary Least Square method was used to analyze the data. From the findings, it is evident that product innovation, process innovation and institutional innovation influence the performance of MFIs in Buea Sub-Division positively. This shows that an increase in a unit of product, process and institutional innovations will contribute to an increase in the performance of MFIs in Buea Sub-Division. These results were statistically significant at 1%, 5% and 10% respectively. This means that any effort to enhance Product, process and institutional innovations will lead to the performance of MFIs by the corresponding values of coefficients of the various constructs. The study recommended that in-order to enhance the performance of MFIs, the management of MFI ought to focus on product innovation (introduce new, improved and create unique products), process innovation (introduce articulated work designs, automated processes and advance software) and institutional innovation (introduce technology, partner with other financial institutions and renew its human resource management system for strategic partnerships) .This will positively improve the performance of MFIs in Buea Sub-Division.
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