Financial Distress and Bankruptcy: Cameroon Micro-Financial Institutions (MFIs)

12 Pages Posted: 14 Jun 2016 Last revised: 28 Jun 2016

See all articles by Tasoh Toh

Tasoh Toh

Independent

Gilbert Diom

University of Buea

Mbi Enerstin

University of Bamenda

Date Written: June 12, 2016

Abstract

In this paper, our focused was to analyze the causes of micro financial sector's instability and frequent bankruptcy in Cameroon. After a valid theoretical review, we identified three core sector`s destabilizing factors (loan delinquency, competition and limited capital in Cameroon. The regression result noted tense competition as the most influential variable to the shaking state of MFIs. Loan delinquency also surfaced as a determinant to MFIs bankruptcy. Even though we noticed no significant role of limited capital, we believed it has a great contribution, especially when MFIs are attacked by high default. We recommend to the government and regulatory authorities to take a step of downsizing at heart. It may create welfare loss, but will help to restore consumers’ confidence and make this sector an “oasis” of financial services for the poor Cameroonian again.

Keywords: Collapse of Micro Financial Institutions, Competition, Loan Delinquency, Limited Capital

JEL Classification: N86

Suggested Citation

Toh, Tasoh and Diom, Gilbert and Enerstin, Mbi, Financial Distress and Bankruptcy: Cameroon Micro-Financial Institutions (MFIs) (June 12, 2016). Available at SSRN: https://ssrn.com/abstract=2794551 or http://dx.doi.org/10.2139/ssrn.2794551

Gilbert Diom

University of Buea ( email )

Molyko to Buea town Rd
P.O. Box 63
Buea
Cameroon

Mbi Enerstin

University of Bamenda ( email )

Mile 6 Nkwen
PO Box 277
Bamenda
Cameroon

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