Financial innovation has been a major catalyst for growth and development in the microfinance industry. This study aims to investigate the impact of financial innovation on the financial performance of micro-financial institutions (MFIs) in Sunyani to come up with new methods of production of goods and services innovations by microfinance …
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Financial innovation has been a major catalyst for growth and development in the microfinance industry. This study aims to investigate the impact of financial innovation on the financial performance of micro-financial institutions (MFIs) in Sunyani to come up with new methods of production of goods and services innovations by microfinance institutions can be of different forms which include such as marketing innovations, product innovations, location innovation, research and development innovation. It remains largely unclear whether microfinance institutions are adequately innovative in their operations given that the number of branches and their clientele base is continuously limited in growth and expansion in SunyaniThe theoretical framework of this research will cover silber’s theory of financial burden, Innovational theory, and institutional innovation demand-supply theory of innovation. A descriptive survey research design was used in this study. The target population comprised management employees working with microfinance institutions and the accessible population was 170 employees working with MFIs registered with BOG. Samples of 67 respondents were drawn from the study population using a stratified random sampling technique. The study population was 170 active microfinance institutions members as at January, 31, 2023. A self-administered questionnaire which was semi-structured was used as a data collection tool to be filed by the respondents from the target. Factor analysis was used to determine the validity of the questionnaire. Some of the innovations observed by MFIs in mobile banking include partnerships, financial training, branch networking and opening up new branches. It was also concluded that innovations can be a source of competitive advantage if a firm understands competitors’ actions, customer needs, and technological development and act accordingly to stay at on with rivals. The study recommended that in order to enhance firm performance the management of microfinance ought to focus on the firm activities aligned towards renewing routines, procedures and processes in an innovative manner in a firm. This will positively improve the performance of microfinanceand services, adopt credit scoring models and digital loan disbursement, collaborate with other financial institutions, and develop financial education programs to improve their financial performance.
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