The Determinants of Return on Equity: Evidences from Sri Lankan Microfinance Institutions

International Refereed Research Journal, Vol. III, Issue 2(2), April 2012

10 Pages Posted: 10 May 2012

Date Written: May 9, 2012

Abstract

Particularly, this study was carried out to ascertain the significant determinants of Return on Equity in Sri Lankan Microfinance Institutions (hereafter MFIs). Within the period of 2005-2011 the researcher evaluated 11 MFIs exists in Sri Lanka. Under this study, efficiency and productivity are measured by operating expense ratio, personal productivity ratio and cost per borrower ratio. Financing structure is measured by debt/equity ratio. Meanwhile, profitability is measured by return on equity ratio. The research concluded stating that the cost per borrower and debt/equity ratios are statistically significant predictor variables in determining return on equity in a MFI. Most notably, the result on relative debt/equity was supported by empirical verifications as well.

Keywords: Return on Equity, Profitability, Microfinance

JEL Classification: G21

Suggested Citation

Dissanayake, D.M.N.S.W., The Determinants of Return on Equity: Evidences from Sri Lankan Microfinance Institutions (May 9, 2012). International Refereed Research Journal, Vol. III, Issue 2(2), April 2012, Available at SSRN: https://ssrn.com/abstract=2055334

D.M.N.S.W. Dissanayake (Contact Author)

University of Kelaniya ( email )

Kelaniya
Sri Lanka
Western 11600
Sri Lanka

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