This study aimed to examine the effect of organizational characteristics and financial performance of microfinance institutions on their contributions towards financial inclusion in Vietnam. To achieve the objectives of this study, data on the organizational characteristics of MFIs were collected from 30 VMFWG member microfinance institutions during the year 2018. Whereas data on the financial performance of MFIs were gathered from 15 sample VMFWG member MFIs. For this purpose, judgmental sampling was used and sample MFIs were selected on the basis of availability complete data during 2014-2018. Six organizational characteristics and seven financial performance indicators were included in the model of analysis to estimate their influence on the financial inclusion proxied by the number of depositors. The data collected from these MFIs were analyzed separately using statistical tools such as frequency, percentages, mean, standard deviation, correlation, and multiple regression analysis using SPSS version 20.
The results of this study indicated that Vietnamese MFIs are characterized by the small size of GLP, group lending, rural oriented, unlicensed and provision of loan and savings services. In the aggregate situations, organizational characteristics related factors more explain the variation in the number of depositors across periods than financial performance indicators do. They explain 77.9% of the variations in the dependent variable whereas financial performance indicators include PAR30, operating expense ratio, ROA, ROE, portfolio yield, OSS and debt to equity ratio together explain 44.5% of the variation in the number of depositors. However, only six variables are statistically significant in influencing the financial inclusion endeavors of the MFIs. Accordingly, the size of GLP, institutional type and lending method has a positive and significant effect on the number of depositors. The finding of this study also indicates that the operating expense ratio and portfolio yield have negative and significant influence, but OSS affects the dependent variable positively and significantly. Based on the findings of the study, it is advisable to the management of the MFIs to pay attention for reducing their operating expenses by implementing digital finance service models instead of stacking on labor-intensive model; increasing services fees, not interest rates; be licensed; shift to both group individual lending method and use cross-subsidization and progressive lending, and should focus on financial sustainability
Read research report in here 
2018. Research_VMFWG