Projekt

Following the global argument that financial linkages is the remaining option for MFIs to secure sustainable funding, formal financial institutions have responded by providing private funds to MFIs for on-lending to their clients. However, banks in East Africa are withdrawing from partnering with MFIs due to MFIs' failure to repay their loans. The withdrawal of private funds from MFIs financing is a major concern, although the use of these funds in MFIs financing is said to deteriorate MFIs' risk management practices, which is another concern. Studies addressing MFIs' risk in general is voluminous, but those assessing MFIs' risk and risk management practices in the context of financial linkages are scant. The agency and transaction cost theories show the possibilities of financial linkages to affect MFIs' risk. The ongoing study, the role of financial linkages on MFIs' sustainability and poverty reduction, does not explicitly focus on MFIs' risk but it reveals the possibility of improved MFIs' risk management practices among MFIs involved in financial linkages. It however shows the presences of bank interferences in MFIs' lending practices, which could increase their risks. Other studies were based on Mixmarket data which is biased to large MFIs and leave out small MFIs which are the majority in Africa. To fill the gap while enhancing the contribution of the ongoing study to knowledge, this study, based on a survey of 300 MFIs in Kenya and Tanzania, intends to examine the relationship between financial linkages and MFIs' risks, financial linkages and MFIs' risk management practices, MFIs' risk management practices and outreach.

• Prof. Dr. Mamadou Diawara

  Universität Frankfurt am Main
  Zentrum für interdisziplinäre
  Afrikaforschung (ZIAF)
  Campus Westend
  Frankfurt am Main
  

• Dr. Esther K. Ishengoma

  University of Dar es Salaam
  Dar es Salaam
  Tansania (Tanzania)
  

• Bank Requirements and Governance for Savings and Credit Co-operative Societies (SACCOS) in Tanzania and Kenya ,

• Financial Linkages and Active Poor Access to Microcredit in Tanzania and Kenya