THE IMPACTS OF CAPITAL STRUCTURE ON THE FINANCIAL PERFORMANCE OF MICRO FINANCE INSTITUTION IN ETHIOPIA

Abstract

This study was undertaken with the objective of identifying the impact of capital structure on microfinance institutions financial performance (profitability) in Ethiopia and thus achieving the optimum level of profitability is crucial. The study was based on twenty microfinance institutions, within the period of 2010 to 2018.MFIs specific and different variables were analyzed by using the balanced panel random effect regression model. MFIs profitability is measured in one ratio: return on asset ratio. The finding of the study revealed that, TDTAR has negative and stastically significant impact on profitability; while others have positive and stastically significant impact on profitability of Ethiopian microfinance institutions.