Effect of Microfinance Banks’ Self-Sufficiency and Religiosity on Financial Inclusion: Empirical Evidence from Kano State Government’s Microfinance Banks
DOI:
https://doi.org/10.56919/jbam.2621.008Keywords:
Financial Inclusion, Microfinance Banks, Operational Self-Sufficiency, Financial Self-Sufficiency, Religiosity, Kano StateAbstract
This study examines the effect of microfinance banks’ financial self-sufficiency (FSS), operational self-sufficiency (OSS) and religiosity (RLT) on financial inclusion within the context of the Kano State Government’s microfinance banks. The research aims to determine how these factors influence the reach of financial services to vulnerable and unserved populations in Northern Nigeria. The study adopted a positivist research philosophy and a cross-sectional survey design, the study conducted a census of 222 management staff across 37 Kano State Government’s microfinance banks in Kano State. Data were collected via structured questionnaires and analysed using Partial Least Square Structural Equation Modelling (PLS-SEM) to test the hypothesized relationships between the variables.The empirical results reveal that all three independent variables are significant positive drivers of financial inclusion: Financial Self-Sufficiency (β=0.355, p<0.01) and Operational Self-Sufficiency (β=0.345, p<0.01) significantly enhance the capacity of banks to provide inclusive services. Also, Religiosity (β=0.167, p<0.05) also exerts a significant positive influence, highlighting the importance of cultural and religious alignment in financial intermediation.The model explained 62.2% of the variance in financial inclusion, representing a substantial explanatory power. Consequently,the study concludes that the success of state-led microfinance initiatives depends on financially self-sufficient and politically insulated financial institutions. Thereligiosity of the populace serves as an important factor in determining financial inclusion radius. It recommends that the Central Bank of Nigeria (CBN) mandate the development of financial products that address religious and cultural diversity to mitigate exclusion. Furthermore, state governments’ policy to establish and nurture microfinance banks should be anchored on Public-Private Partnerships (PPP) at inception to ensure long-term sustainability and a clear exit strategy for the government.
References
Adams, P. A., Robert, M., Bauer, P. W., Sickles, R. C., Kiley, A. U., Michael, T., ... & Udell, G. F. (2002). Series Index. Memory, 2003, 02.
Bari, F., Malik, K., Meki, M., & Quinn, S. (2024). Asset-based microfinance for microenterprises: Evidence from Pakistan. American Economic Review, 114(2), 534-574. DOI: https://doi.org/10.1257/aer.20210169
Beg, K. (2016). Determinants of financial self sufficiency of andhrapradesh microfinance institutions. Journal of Business & Financial Affairs, 5(3), 1-9. DOI: https://doi.org/10.4172/2167-0234.1000209
Bergan, A., &McConatha, J. T. (2001). Religiosity and life satisfaction. Activities, Adaptation & Aging, 24(3), 23-34. DOI: https://doi.org/10.1300/J016v24n03_02
Central Bank of Nigeria (2013) determinants of profitability of microfinance banks in Nigeria. Abuja: CBN.
Chaudhury, N. J., Alam, M. M., &Dooty, E. N. (2022). Operational Self Sufficiency of Bangladeshi Micro Finance Institutions: Do The Managerial Factors Matter?. The Journal of Developing Areas, 56(1), 233-248. DOI: https://doi.org/10.1353/jda.2022.0000
Chaudhury, S., Krishna, A. N., Gupta, S., Sankaran, K. S., Khan, S., Sau, K., ...& Sammy, F. (2022). [Retracted] Effective Image Processing and Segmentation‐Based Machine Learning Techniques for Diagnosis of Breast Cancer. Computational and Mathematical Methods in Medicine, 2022(1), 6841334. DOI: https://doi.org/10.1155/2022/6841334
Gibbons, D. S., & Meehan, J. W. (1999).The microcredit summit's challenge: Working toward institutional financial self-sufficiency while maintaining a commitment to serving the poorest families. Journal of Microfinance/ESR Review, 1(1), 131-192.
Hailu, A. Y., &Venkateswarlu, P. (2015). Financial and operating sustainability of microfinance institutions, Ethiopia. International Journal of Multidisciplinary Educational Research, 4(12(1)), 91-114.
Hussain, R. I., Bashir, S., & Hussain, S. (2020). Financial sustainability and corporate social responsibility under mediating effect of operational self-sustainability. Frontiers in psychology, 11, 550029. DOI: https://doi.org/10.3389/fpsyg.2020.550029
Khan, Z. A., Butt, S., & Khan, A. A. (2017). Determinants of financial self-sufficiency in microfinance institutions: a study of Pakistan, India and Bangladesh. European Online Journal of Natural and Social Sciences, 6(2), 272-296.
Remer, L., &Kattilakoski, H. (2021). Microfinance institutions’ operational self-sufficiency in sub-Saharan Africa: empirical evidence. International Journal of Corporate Social Responsibility, 6, 1-12. DOI: https://doi.org/10.1186/s40991-021-00059-5
Robinson, M. (2001). The microfinance revolution: Sustainable finance for the poor. World Bank Publications. DOI: https://doi.org/10.1596/0-8213-4524-9
Schäfer, K., &Fukasawa, Y. (2011). Factors determining the operational self-sufficiency among microfinance institutions. Advances in Business Research, 2(1), 171-178.
Sedikides, C., & Green, J. D. (2009). Memory as a self‐protective mechanism. Social and Personality Psychology Compass, 3(6), 1055-1068. DOI: https://doi.org/10.1111/j.1751-9004.2009.00220.x
Shen, Y., Agyekum, F., Reddy, K., & Wallace, D. (2026). The welfare impact of financial inclusion: a research agenda. Journal of Accounting Literature, 48(1), 55-75. DOI: https://doi.org/10.1108/JAL-10-2023-0190
Super, C. M. (2023). The developmental context of culture: Reflections on the contributions and legacy of Jerome Kagan. Developmental Psychology. DOI: https://doi.org/10.1037/dev0001645
Tafesse, A. (2014). Internal detremnents of operational and financial sustainability of the micro finance institutions (MFIs) in Ethiopia (Doctoral dissertation, ST. MARY’S UNIVERSITY).
Wang, Y., & Zhang, Z. (2025). Digital development and rural financial inclusion: Evidence from China. Research in International Business and Finance, 73, 102637. DOI: https://doi.org/10.1016/j.ribaf.2024.102637
Williamson, I. O., King Jr, J. E., Lepak, D., & Sarma, A. (2010). Firm reputation, recruitment web sites, and attracting applicants. Human resource management, 49(4), 669-687. DOI: https://doi.org/10.1002/hrm.20379
Yaron, J., & Manos, R. (2010). Information transparency and agency costs in the microfinance industry: The adequacy of the operational self-sufficiency index. Review of Market Integration, 2(1), 87-99. DOI: https://doi.org/10.1177/097492921000200106
Yayehyirad, Y. A. (2023) Determinants of Financial and Operational Sustainability of Selected Micro Finance Institutions in Ethiopia. International Journal for Multidisciplinary Research, 5(4). 1-56 DOI: https://doi.org/10.36948/ijfmr.2023.v05i04.4315
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
