Lending Practices, Low-Cost Strategy and Performance of Microfinance: Empirical Evidence from Nigeria

Abstract

Micro-financing is an old lending practice in Nigeria. Before the introduction of modern microfinance institutions, microfinance exists informally across the country. The study investigated the relationships between Lending practices, business strategy and performance of microfinance in Nigeria. The MFIs ownership involved are; the Community Bank MFIs, the Private MFIs, the Government MFIs, the NGO MFIs, and the Foreign MFIs in Nigeria. By using questionnaires, the data were collected from 121 MFIs in Nigeria. By using regression technique, the findings of the study indicate that low-cost strategy moderate the relationship between lending practices and performance of MFIs. The result of the study seems to demonstrate that the performance of MFIs is good lending practices as well as low-cost strategy.