DETERMINANTS OF CAPITAL STRUCTURE IN ETHIOPIAN MICROFINANCE INSTITUTIONS

Abstract

Capital structure is the mixture of debt and equity financing. Its choice and determinants related to many different factors. Studies indicates that the capital structure of Microfinance Institutions have significant impact on the sustainability and outreach of these organizations. Hence, studying the factors that determine the capital structure of these organizations is essential. Although the capital structure of financial firms has been studied by some scholars, such types of studies are rare in theMFI sector. Thus the purpose of this study is to investigate the determinants of capital structure in the Ethiopia MFI industry. To accomplish the objective of the study the explanatory research design has been employed. The researcher would use secondary data of 8 sample MFIs (Buusa Gonofaa micro finance s.co, Wasasa microfinance Institution, dynamic microfinance Institution s.co, Poverty eradication and community empowerment (Peace) ,Amhara credit and saving institution (ACSI), Dedebit credit and saving institution (DECSI),ossco microfinance institution & Omo microfinance institution.) that fulfill the criteria of data availability from the association of micro finance institutions (AMIS) and annual report of national bank of Ethiopia (NBE) database covering the period of 2010–2018and the study includes five determined factors. A panel data using Random Effect Multiple Regression model would be used to analyze the standard determinants of capital structure.