Economic and Financial Review
Publisher
Central Bank of Nigeria
Keywords
Microfinance; Bank, Panel Data, Sustainability, Digitalisation
Abstract
The study examines microfinance sustainability in a digitalised economy using a panel dataset of 1,314 microfinance banks in Nigeria spanning 2012 to 2020. The results show that digitalisation poses significant threats to microfinance sustainability in Nigeria. The industry presently faces strong competition from commercial banks and Fintech companies, and is characterised by a low capital base, product innovation and market penetration, high transaction costs, and some idiosyncratic risks. The study suggests that microfinance institutions should leverage their large customer base by utilising digital innovations. Regulatory agencies should ensure that Fintech services are adequately regulated, affordable, and easily accessible to microfinance institutions. This would allow the microfinance industry to operate at a reduced transaction cost, increase its outreach to the poor, minimise risks and enhance sustainability.
Publication Title
CBN Economic and Financial Review
Issue
1
Volume
60
First Page
53
Last Page
65
Classification-JEL
C23, G21, E42
Recommended Citation
Adebiyi, M. A., Olusegun T. S., & Yakubu, J. (2022). Microfinance Sustainability in a Digitalised Economy. CBN Economic and Financial Review, 60(1). 53 - 65.