Abstract

This paper examined the relationship between Financial Intermediation and the performance of Microfinance banks in Nigeria. The main objective of this study is to examine the effect of financial intermediation on the performance of Microfinance banks in Nigeria. Data were sourced from the Central Bank of Nigeria Statistical Bulletin. The method adopted for data analysis to the stated objective was regression analysis. It was discovered in the Credit Supply Equation 1 that there was a significant relationship between Total loans of Microfinance banks and deposit mobilized by Microfinance banks in Nigeria. It was revealed in MFBs Performance Equation 2 that there was a significant relationship between total asset and Capital employed by Microfinance banks in Nigeria. It was also revealed in MFBs Performance Equation 3 that there is a significant relationship between Loans to deposit ratio of Microfinance Banks and Liquidity ratio of Microfinance banks in Nigeria. The study, therefore, recommends that Microfinance bank deposits should be mobilized on a continuous base in order to increase the availability of credit to Microfinance bank Customers; Microfinance banks should efficiently utilize the Mobilized deposits, Shareholders funds to achieve loan distribution and withdrawals which will also have positive effect on total asset; Microfinance banks should foster higher level of liquidity in order to increase its ability to cover withdrawals made by its customers.

Keywords: microfinance bank, financial intermediation, deposit mobilization, capital employed, shareholders fund, total loans, total asset, liquidity ratio, loans to deposit ratio.

JEL Classification: G21, G12, E4, E5, H8.

Cite as: Adeyinka, A. J., Odi, N., Ebenehi, O. E., Ademola, O. G., James, S. O. (2018). Implications of Financial Intermediation on the Performance of Microfinance Banks in Nigeria: 2000-2016. Financial Markets, Institutions and Risks, 2(4), 68-81. DOI: http://doi.org/10.21272/fmir.2(4).68-81.2018

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