The Factor impacting transformation of Micro finance to commercial banks

Abstract

The aim of this study was to investigate the impact of transformation of micro finance institutions into commercial banks taking large MFIs in Ethiopia. The study was conducted using an explanatory research design to attain this study. The study employed a combination of qualitative and quantitative research methodologies to gather and evaluate both primary and secondary data sources. For the study, purpose five MFIs has been chosen from among the 30 registered MFIs that were currently members of AEMFI. The primary data are obtain using pre- designed questionnaires from MFIs management, supervision and bank licensing teams, while the secondary data is obtain through documentary reviews. A total of 165 respondents were drawn from MFIs workers, super vision and bank licensing team. The sample approaches were purposive sampling, which is a non-probability sampling strategy. The data from the questionnaire was encoded; stored and analyzed using descriptive statistics and multiple linear regressions model whereas the data from the interview was interpreted using notes. The findings indicated that organizational culture , IT infrastructure, human resource (HR) and ownership governance had a positive and statistically significant impact on the transformation of MFIs to commercial banks. Furthermore, the same output obtained from the questioner about the association between the variables in the study and transformation. The recommendation for this study was that MFIs before considering a transformation should have to plan adequately and commit the required resources.