Determinants of liquidity in Micro Finance Institution, Evidence From large Micro Finance Institution in Ethiopia

Abstract

Liquidity creation is the main concerns of MFI since it is crucial for its existence; hence the main objective of this study was to identify the determinants of large MFI in Ethiopia. The data covered the period from 2005-2014 for the sample of five MFI in Ethiopia and used secondary data. four variables were analyzed by employing the balanced panel fixed effect regression model and the result of the study revealed that capital adequacy, and nonperforming loan have positive and statistically significant impacts on liquidity of Ethiopian MFI. Whereas MFI size and profitability positive/negative respectively and statistically insignificant/ has no any impact on liquidity of Ethiopia MFI for the tested period.