Ahmed, Saghir (2013): Determinants of operational risk and Microfinance Banks performance in Pakistan.
Preview |
PDF
MPRA_paper_108182.pdf Download (713kB) | Preview |
Abstract
Aim/Purpose – This paper presents the analysis of determinants of operational risk and their impact on Microfinance Banks (MFB’s) performance. Design/methodology/approach – The sample size was 120 consisting of thirty respond-ents from each of four MFB’s out of eight in total. A standard data collection tool; the questionnaire was used. In addition, personal interviews with few regulators were also conducted for a better understanding of the subject from a practical perspective. Statistical Package for Social Sciences (SPSS) was used to analyze the collected data and for further analysis Ordinal Logistic Regression was used. Findings – Show that staff salaries, employee education, technical support, employee training and consumer education were some of the most important factors which explain MFB’s performance. Overall Ordinal Logistic Regression results show that internal control system is the major source of operational risk and has a high impact on MFB’s performance while the intensity of the impact was low in case of human resource. Research implications/limitations – Due to the limited time and cost issues, only those MFB’s were considered which had operations either in Islamabad or in Punjab province. Data collection tool was revised multiple times to make it easier, friendly and profes-sional because organizations were reluctant to respond. The small sample size was con-sidered in order to reduce traveling time and cost; however the large sample size will absolutely produce better results. Originality/value/contribution – Despite the addition in existing knowledge, the paper highlighted the strategic importance of different selected variables including consumer financial literacy for MFB’s performance. Nevertheless, it also presents a list of 24 fac-tors, perceived by regulators, which impede the ability to achieve their desired organiza-tional objectives.
Item Type: | MPRA Paper |
---|---|
Original Title: | Determinants of operational risk and Microfinance Banks performance in Pakistan |
Language: | English |
Keywords: | operational risk, microfinance banks performance, financial literacy |
Subjects: | G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages |
Item ID: | 108182 |
Depositing User: | SAGHIR AHMED |
Date Deposited: | 12 Jun 2021 06:55 |
Last Modified: | 12 Jun 2021 06:55 |
References: | Aboagye, A. Q., & Otieku, J. (2010). Are Ghanaian MFIs’ performance associated with corporate governance? Corporate Governance: The International Journal of Business in Society, 10(3), 307–320. https://doi.org/10.1108/14720701011051938 Akhtar, S. (2007). Expanding Microfinance Outreach in Pakistan. Retrieved from https://www.google.pt/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwidq6fJ_oDaAhXJtBQKHTCKAX4QFgguMAE&url=http%3A%2F%2Fwww.arabic.microfinancegateway.org%2Fsites%2Fdefault%2Ffiles%2Fmfg-en-paper-expanding-microfinance-outreach-in pakistan-feb-2007_0 Blacker, K. (2000). Mitigating Operational Risk in British Retail Banks. Risk Management, 2(3), 23–33. Cagan, P. (2008). What lies beneath. Operational risk issues underlying the subprime crisis. The RMA Journal, 96–100. Cagan, P. (2009). Managing Operational Risk through the Credit Crisis. The Journal of Compliance, Risk & Opportunity, 3(2), 19–26. Chernobai, A., Jorion, P., & Yu, F. (2008). The determinants of operational losses. 18th Annual Derivatives Securities and Risk Management. Retrieved from http://www.fdic.gov/bank/analytical/cfr/Chernobai.pdf Chernobai, A., Jorion, P., & Yu, F. (2011). The Determinants of Operational Risk in U.S. Financial Institutions. The Journal of Financial and Quantitative Analysis, 46(6), 1683–1725. Retrieved from http://www.jstor.org/stable/41409665%0Ahttp://about.jstor.org/terms Chu, M. (2008). Is it fair to do business with the poor? Geneva Papers on Inclusiveness Symposium Special Issue, 1–12. Retrieved from www.microfinanceforum.org Committee, B. (2010). Basel Committee on Banking Supervision Consultative Document Countercyclical capital buffer proposal. Basel II: The New Basel Capital Accord - second consultative paper. Retrieved from https://www.bis.org/publ/bcbsca07.pdf Demaris, A. (1995). A Tutorial in Logistic Regression. Source Journal of Marriage and Family, 57(4), 956–968. https://doi.org/10.2307/353415 Duflos, E., Latortue, A., Mommartz, R., Perrett, G., & Staschen, S. (2007). Effectiveness and accountability review with a policy diagnostic. Retrieved from http://documents.worldbank.org/curated/en/475031468285043402/pdf/405860PAK0clear1report01PUBLIC1.pdf Gaul, S. (2011). Defining responsible financial performance : the role of profits. MicroBanking Bulletin, (May 2011), 1–7. Grody, A. D., Harmantzis, F., & Kaple, G. J. (2007). Operational Risk and Reference Data: Exploring Costs, Capital Requirements and Risk Mitigation . Journal of Operational Risk, 1(3), 57. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=849224%5Cnhttp://ssrn.com/abstract=849224 Hannah, M., & Quigley, P. (1996). Presentation of ordinal regression analysis on the original scale. Biometrics, 52(2), 771–775. https://doi.org/10.2307/2532917 Harmantzis, F. (2004). Operational Risk Management in Financial Services and the New Basel Accord. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.579321 Hitt, M., Bierman, L., & Shimizu, K. (2001). Direct and moderating effects of human capital on strategy and performance in professional service firms: A resource-based perspective. Academy of Management. Retrieved from http://amj.aom.org/content/44/1/13.short Hoque, M., Chishty, M., & Halloway, R. (2011). Commercialization and changes in capital structure in microfinance institutions. Managerial Finance, 37(5), 414–425. https://doi.org/10.1108/03074351111126906 Kamukama, N., Ahiauzu, A., & Ntayi, J. M. (2011). Competitive advantage: mediator of intellectual capital and performance. Journal of Intellectual Capital, 12(1), 152–164. https://doi.org/10.1108/14691931111097953 Karim, N., Tarazi, M., & Reille, X. (2008). Islamic Microfinance : An Emerging Market Niche. Cgap, 49(August), 1–16. https://doi.org/10.1355/SJ23-1D Norell, D. (2001). How to reduce arrears in microfinance institutions. Journal of Microfinance/ESR Review, 3(1), 115–130. Retrieved from https://ojs.lib.byu.edu/spc/index.php/ESR/article/view/1374%5Cnpapers3://publication/uuid/E1A6B26B-EACA-4CCB-A809-FE48A9EDBFC4 Nunally, J. (1978). Psychometric Theory. Auflage, New York ua: Mc Graw-Hill. Peng, C.-Y. J., So, T.-S. H., Stage, F. K., & St John, E. P. 2002). The Use and Interpretation of Logistic Regression in Higher Education. Source: Research in Higher Education Research in Higher Education, 43(3), 259–293. https://doi.org/10.1023/A:1014858517172 Peng, C. J., Lee, K. U. K. L., & Ingersoll, G. M. (2002). An Introduction to Logistic Regression Analysis and Reporting. The Journal of Educational Research but, 96(1), 3–14. https://doi.org/10.1080/00220670209598786 Power, M. (2005). The invention of operational risk. Review of International Political Economy, 12(4), 577–599. https://doi.org/10.1080/09692290500240271 SBP (2006). Performance of Microfinance Sector. Financial stability review. Retrieved from: www.sbp.org.pk/fsr/2006/English/Microfinance.pdf SBP (2011). Strategic framework for sustainable Microfinance in Pakistan. Retrieved from: http://www.sbp.org.pk/MFD/Strategic-Framework-SM-24-Jan-2011.pdf Santos, J. R. J. (1999). Cronbach’s Alpha: A Tool for Assessing the Reliability of Scales. Extension Journal, Inc., 37(2). Retrieved from http://www.joe.org/joe/1999april/tt3.php Sharabati, A. A., Naji Jawad, S., & Bontis, N. (2010). Intellectual capital and business performance in the pharmaceutical sector of Jordan. Management Decision, 48(1), 105–131. https://doi.org/10.1108/00251741011014481 Steinwand, D. D. (2000). A Risk management Framework for Microfinance Institutions., 1–65. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/108182 |