The Influence of Financial Leverage, Customer Deposit and Capital Adequacy on the Financial Sustainability of some Selected Nigerian Micro Finance Banks.
How to attain financial sustainability of microfinance banks in Nigeria today is one of the main problems bedeviling our microfinance banks. Several Scholars have investigated the determining factors affecting financial sustainability of Microfinance Institutions in various countries using large and well developed Microfinance Institutions. In consideration of some factors that may impact on the sustainability of microfinance banks in Nigeria, this study aims to examine the influence of financial leverage, customer deposit and capital adequacy on financial sustainability of some selected microfinance banks in Nigeria. This study utilizes secondary data sourced from the certified annual reports of the selected microfinance banks. The data for the study were analyzed using OLS regression and fixed effect regression and it was observed that there is no statistical evidence to suggest that financial leverage, customer deposit and capital adequacy has significant influence on both financial and operational sustainability. The study found insignificantly positive influence of financial leverage and insignificantly negative influence of customer deposit and capital adequacy on financial sustainability of MFBs. Capital adequacy shows significantly positive influence and financial leverage and customer deposit indicates negative influence on operational sustainability of MFBs in Nigeria. The study therefore recommends that microfinance banks should source funds from both debt and equity financing, mobilize deposits from customers and optimize equity capital in order to be financially and operationally sustainable.
