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Microfinance Delivery: Challenges & Innovative Strategies of Microfinance Institutions of Ahmedabad & Gandhinagar City
123
Chapter 6
DATA ANALYSIS, INTERPRETATION AND HYPOTHESIS
TESTING
6.1 Analysis
In this chapter, the focus was on the analysis of the data and the empirical examination of the
methodological objectives of the study.
The analysis presented in this chapter, comprised of three parts. In the first part, factor analysis was
used to identify the type of challenges faced by Micro Finance Institutions in Ahmedabad and
Gandhinagar district. Second part of the study is to identify the available opportunities for the
microfinance institutions. The data collection from executives, through structured questionnaire,
after due compilation and sorting, is presented both in tabular form and in graphical form. Each
graph shows the analysis on the respondent’s response to the questions asked. In order to study the
challenges affecting Microfinance institutions, a questionnaire was framed using items previously
used in literature. The techno-graphics were measured using a category scale whereas others items
were measured using a five point likert scale wherein respondents indicate their degree of agreement
or disagreement (Strongly Disagree, Disagree, Neither Agree nor Disagree, Agree, Strongly Agree)
for detailed description of the entire questionnaire along with the source for the items. Sample size
was 90, researcher has distributed 90 questionnaires and due to non response error, 75 responses
were received (83.3%) from Ahmedabad and Gandhinagar cities of Gujarat state from MFIs.
Microfinance Delivery: Challenges & Innovative Strategies of Microfinance Institutions of Ahmedabad & Gandhinagar City
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6.2 Summary of Data Analysis & Discussions
Various technographic items have been represented in a tabular form, illustrating relatively
magnitude or frequencies (Table 1).
Table 1 Frequency table based on Questionnaire
Items Frequency Percentage
Operational Area Ahmedabad 56 67 Gandhinagar 19 33
Legal Entity
Trust 3 4 Society 31 41 Section 25 Company 9 12 NBFC 32 43
Importance of Objective Left-client Right-Sus
0 – 100 6 8 20 – 80 24 32 40 – 60 28 37 60 – 40 15 20 80 - 20 2 3
Impact Study Undertaken
Yes 51 68 No 24 32
Distance in Rural Area
More than 10 Kms 20 27 Less than 10 Kms 55 73
Distance in Urban Area
More than 10 Kms 18 24 Less than 10 Kms 57 76
Meeting with Client outside
Institution
No 17 23
Yes 58 77
Frequency of Meeting
Less than once a month 24 32 More than once a month 51 68
Market Survey Conducted
Yes 34 45 No 41 55
MFIs promote all kinds of Business
Strongly Disagree 4 5 Disagree 10 13 Neither Agree nor Disagree 26 35 Agree 12 16 Strongly Agree 23 31
Effective against Poverty
Strongly Disagree 0 0 Disagree 3 4 Neither Agree nor Disagree 0 0
Microfinance Delivery: Challenges & Innovative Strategies of Microfinance Institutions of Ahmedabad & Gandhinagar City
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Agree 26 35 Strongly Agree 46 61
Promote Economic Growth
Strongly Disagree 6 9 Disagree 0 0 Neither Agree nor Disagree 0 0 Agree 45 64 Strongly Agree 19 27
Aims not only Poverty Purge
Strongly Disagree 10 13 Disagree 14 19 Neither Agree nor Disagree 7 9 Agree 19 25 Strongly Agree 25 34
Partnership between Comm. Banks & MFIs
Strongly Disagree 4 6 Disagree 13 40
Neither Agree nor Disagree 6 8 Agree 30 17 Strongly Agree 22 29
Source: Own Source
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6.3 Survey Analysis: Fig: 1 Breakup in Ahmedabad and Gandhinagar category on the basis of operational area.
Source: Own Source
From the figure it can be seen that the out of 75 respondents, majority are from Ahmedabad
(67%) and 33% are from Gandhinagar city. The reason is that majority of Microfinance
Institutions are in Ahmedabad district.
Fig: 2 Response regarding the type of legal entity, MFIs are following i.e. Trust, Society, Section 25 Company or Non-banking Financial Institutions
Source: Own Source
When the respondents were asked the question regarding the type of legal entity their MFI
was having, it was found that, 43% of MFIs are Non Banking Financial Institutions (NBFCs)
Microfinance Delivery: Challenges & Innovative Strategies of Microfinance Institutions of Ahmedabad & Gandhinagar City
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followed by society (41%), Section 25 Company 12% and Trust 4%. The number of MFI -
NBFC are relatively much high in especially in Gujarat state.
Fig: 3 Response regarding the extent, MFI’s Governance gives importance to client coverage and/or self sustainability as an objective.
Source: Own Source
From the figure it can be seen that the out of 75 respondents, 43(57%) respondents believe
the fact that both sustainability and outreach are more or less equally important as an
objective.
Majorly, Society and Section 25 Company were having this opinion. NBFCs were
emphasize more on sustainability 30 (40%) as an objective. In case of Legal Entity, Trust,
emphasize is more on client coverage i.e. outreach as compare to sustainability. Thus the
survey found that though the basic ideology of MFIs is to serve the society and reach to the
poors but NBFCs and Section 25 Companies are giving due importance to sustainability as
an objective of the MFI.
Microfinance Delivery: Challenges & Innovative Strategies of Microfinance Institutions of Ahmedabad & Gandhinagar City
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Fig: 4 Response regarding whether MFI undertake impact study to gauge social impact.
Source: Own Source
It can be seen that 68% of respondents have conducted the impact study to know the extent
of improvement in standard of living of people. This helps them to get connected with the
poor people and also helps them to formulate strategies regarding loan management. It also
gives them the way to reach to maximum clients so that the client coverage can be taken care
of along with the objective sustainability.
Fig: 5 Response regarding distance covered by client travel to receive a loan or make a deposit.
Source : Own Source
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When respondents were asked question regarding distance travel to receive a loan or make
deposits, it was found that majority of clients (76%) travel less than 10 kms. This means that
the majority of clients of these MFIs are from nearby areas. The reason is that there are
many Self Help Groups, Joint Liability Groups who are taking care of these clients. These
SHGs and JLGs are linked to these MFIs.
Fig: 6 Meeting with the client outside Institution
Source : Own Source
From the data it can be seen that majority of credit agents (77%) are going out of their
institution to meet their clients. In fact, sales staff is recruited for this purpose. Their
responsibility is to handle the clients of specific region/area. This helps them to get
connected to their clients to keep track of the payment schedule so that NPA fully remains
under control. Meeting clients outside institution also helps credit agents to develop
strategies regarding liability and asset side.
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Fig: 7 Frequency of meeting for allocation of loan
Source : Own Source It can be seen from the chart that for making decision regarding allocation of loans, majority
of MFIs (68%) prefer meeting clients more than once in a month. It indicates that MFIs are
taking care of meeting both the main objectives i.e. sustainability and outreach. Regular
meeting also help MFIs to get connected with their clients.
Fig: 8 Regarding MFI carrying out market survey to improve the quality of services to the clients
Source : Own Source
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It can be seen that despite regular meeting with client to improve the quality of services for
the clients, market survey is not given much importance as a tool to improve overall service.
Market survey can help MFIs to improve overall services. MFIs can come with viable
solutions from the issues raised by clients. Though it was found that the sales staffs are
given training to satisfy the need and requirement of the clients.
Fig: 9 Regarding whether MFIs can promote all kinds of business
Source : Own Source
Data reveals that nearly half of the Microfinance Institutions (47%) agree to the fact that they
can promote all kinds of business i.e all kinds of microfinancing activities like micro saving,
microcredit, micro insurance, remittance and other products like pension, provident fund, etc.
Executives from NBFC and Section 25 Company majorly are of the opinion that MFIs
gradually should start promoting all other microfinancing activities along with microcredit.
On the other hand, 18% of respondents believe that there institution’s role is majorly lending
money and they should focus only on microcredit facilities.
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Fig: 10 Opinion regarding MFI as an effective tool against poverty
Source : Own Source
Response to the question regarding MFI as an effective tool against poverty, reveals that
almost all types of legal entity whether trust, Society, Section 25 Company Act or NBFC
(96%), believes that microfinance is surely an effective tool against poverty. The reason of
stating the same so confidently is because they have conducted the impact assessment study.
Question previously asked shows that the emergence of these institutions has enhanced the
standard of living of people in nearby area.
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Fig: 11 Response regarding partnership between Commercial Banks and MFIs
Source : Own Source
From the chart, it can be depicted that 52% of respondents find partnership between
commercial banks and MFIs as available opportunity, as it helps them to raise funds at
reasonable rate. Data also reveals that 17% of respondents do not take the partnership
between commercial banks and MFIs as an opportunity. The reason could be that after the
scams, the norms of the commercial banks have become stringent regarding loan
disbursement.
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6.4 Factor Analysis
Factor analysis attempts to explain the pattern of correlations within a set of 33 observed
variables of Microfinance Institutions (MFIs). Factor analysis is further used in data
reduction to identify a small number of factors that explain most of the variance observed in
a much larger number of manifest variables. It is further used to generate hypotheses
regarding causal mechanisms or to screen variables for subsequent analysis. (Table 2)
Table 2 KMO and Bartlett's Test
Table 2 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.722
Bartlett's Test of Sphericity
Approx. Chi-Square 1.53E+04 Df 1035 Sig. 0
Source: Own data calculated using SPSS
Here Kaiser-Meyer-Olkin Measure of Sampling Adequacy is 0.722 which is above 0.7 so
believed to efficient for scales.
Further in order to evolve the underlying dimensions of challenges faced, principle component
factor along with Varimax rotation was conducted on 33 acceptance items using minimum
Eigen value of 1 as a criterion for factor extracted (Table 3).
Table 3 Communalities
Initial tra_co 1 Roa 1 op_re 1 co_de 1 Par 1 res_lo 1 l_proof 1 fin_res 1
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per_ad 1 fin_re 1 mg_pro 1 ran_pro 1 inad_net 1 Mis 1 Govern 1 Skill 1 reten_rate 1 Mindset 1 hum_qua 1 Infra 1 Albb 1 Flex 1 Bosm 1 Reach 1 new_ar 1 Bopfsw 1 cons_front 1 act_borr 1 gov_reg 1 con_inv 1 fin_lit 1 Comp 1 inst_role 1 Extraction Method: Principal Component Analysis.
Source: Own data calculated using SPSS
Initial communalities are estimates of the variance in 33 observed variables accounted for by all
components or factors. Extraction communalities are estimates of the variance in each variable
accounted for by the factors (or components) in the factor solution. In the above table it can be seen
that all the 33 sub variables are having extraction more than 0.5 and thus it can be said that all
observed variables are fit well with the factor solution (Table 2).
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Total 9 major factors are extracted having 33 items and these 9 factors explain 87.65 % variance
in scale (Table 4). The factors generated were as follows:
Table 4 Total Variance Explained
Compo-nent
Initial Eigenvalues Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings
Total
% of Varianc
e Cumulativ
e % Total
% of Varianc
e
Cumulative
% Total
% of Varianc
e 1 6.22 18.85 18.85 6.22 18.85 18.85 4.36 13.22 2 4.95 15.02 33.87 4.96 15.02 33.87 4.22 12.80 3 3.60 12.90 46.77 3.60 12.90 46.77 3.71 11.24 4 3.13 10.48 57.25 3.13 10.48 57.25 2.88 9.74 5 2.87 8.68 65.93 2.87 8.68 65.93 2.49 8.56 6 2.16 6.55 72.48 2.16 6.55 72.48 2.47 8.48 7 1.98 6.01 78.49 1.98 6.01 78.49 2.38 8.21 8 1.53 4.62 83.11 1.53 4.62 83.11 2.34 8.39 9 1.39 4.54 87.65 1.39 4.54 87.65 2.21 7.01 10 1.09 3.32 87.65 11 0.88 2.66 90.31 12 0.72 2.18 92.49 13 0.58 1.77 94.26 14 0.47 1.41 95.67 15 0.35 1.06 96.73 16 0.27 0.82 97.55 17 0.23 0.69 98.24 18 0.20 0.62 98.86 19 0.12 0.35 99.21 20 0.09 0.28 99.49 21 0.07 0.22 99.71 22 0.05 0.16 99.87 23 0.03 0.09 99.95 24 0.02 0.05 100.00 25 0.00 0.00 100.00 26 0.00 0.00 100.00 27 0.00 0.00 100.00 28 0.00 0.00 100.00
Microfinance Delivery: Challenges & Innovative Strategies of Microfinance Institutions of Ahmedabad & Gandhinagar City
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29 0.00 0.00 100.00 30 0.00 0.00 100.00 31 0.00 0.00 100.00 32 0.00 0.00 100.00 33 0.00 0.00 100.00 Extraction Method: Principal Component Analysis.
Source: Own data calculated using SPSS Fig 12: Scree Plot of Variables
Source: Own data calculated using SPSS
The Scree plot in Figure 12, is breaking at 33 sub- factor, which indicate that all these sub
factors are significantly influencing Nine factors respectively.
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Table 5 : Summary Sheet of Factors generated
Components Name of the factor
Eigen Value
% of Variance
Cronbach Alpha
Financial Issues
High Transaction cost
6.22 18.522 0.912
Inadequacy of financial resources as the primary constraint (cheap fund) Rescheduling loans High personnel & admin expenses relative to loan portfolio Use of asset to generate return Frequency of financial reporting to Management Quality of portfolio
Operational Issues
Quality human resources
4.957 15.02 0.874
Provision of a range of products and services Lack of basic infrastructure Availability of inadequate network Management and processing of data
HR issues
No. of borrowers per field staff worker
3.597 10.899 0.751
Reaching the very poor No. of active borrowers Average loan balance per borrower Flexibility w.r.t timing of its operation
Social issues
Collection & delivery of money to remote areas
3.129 4.128 0.713
low profitability of dealing with poor clients Difficult to cover cost with operating revenue
External issues
Govt. Regulatory actions for MF industry
2.866 8.684 0.675
Loans used in Consumption not invested Competition Banks and lending institution’s role in MF industry
Expansion
Going into new areas
2.16 6.547 0.699 Constraints in Reaching Frontier Areas Retention rate
Financial Literacy
Client’ financial literacy 1.984 6.012 0.823 Borrower per staff member
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Management Information System
Governance problems
1.525 4.622 0.784 Management Information System
Institutional Goals
Development mindset of staff
1.394 4.21 0.664 Education and skill set and of staff member
Source: Own data calculated using SPSS
Table 5 indicates the factor loading is more than 0.5 for all variables which indicate that all of them
are significant in influencing their respective factors. The Eigen values of Nine factors found are
more than 1. Cronbach Alpha for nine factors is 0.7, which signifies that the data is reliable.
In case of the first factor, Financial Issues, factor loading is the highest for the sub factor, High
transaction cost (0.868) which indicates that it is a major financial issue among all given sub factors,
followed by Inadequacy of financial resources as the primary constraint,(cheap fund) 0.846. As all
sub-factor loads are more than 0.5, except rescheduling loans (-0.811); they are significant in
influencing Financial Issues.
In case of the second factor, operational Issues, factor loading is the highest for the sub factor,
management and processing of data which indicates that it is a major operational issue among all
given sub factors. As all sub-factor loads are more than 0.5, they are significant in influencing
operational Issues. Through the survey it was found that MFIs are having operational issues like
management and processing of data, provision of a range of products and services, lack of basic
infrastructure and availability of inadequate network.
In case of the third factor, Human Resource issues, factor loading is the highest for the sub factor,
No. of borrowers per field staff worker (0.888). This indicate that the MFIs in Ahmedabad and
Gandhinagar area the number of employees especially field staff worker are less. Moreover
sufficient training on time to time basis is required to be given to them so that the productivity
increases.
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It can be seen that in the fourth factor, social issues, factor loading is highest for Collection &
delivery of money to remote areas (0.614). As all sub-factor loads are more than 0.5, they are
significant in influencing sustainability.
In case of the fifth factor, external issues, factor loading is the highest for the sub factor,
Government regulatory actions for MF industry (0.656). The reason for the same is the scams
coming out microfinance area. Due to which fortunately RBI has become active and has passed
Microfinance Act. In case of sub-factor, Banks and lending institution’s role in MF industry, the
factor loading is negative (-0.819) which indicate that the banks and lending institutions are not seen
as challenge, but as a supporter to smooth functioning of microfinance activities.
It can be seen that in the sixth factor, factor loading is highest for the sub factor retention rate
(0.915). This indicates that the attrition rate among employees in microfinance business is high.
Thus the salary package, incentives, regular training, work environment etc. to be improved to
reduce the attrition. It can be seen that in the seventh factor, financial literacy, factor loading is
highest for Client’ financial literacy (0.857). As all sub-factor loads are more than 0.5, they are
significant in influencing financial literacy. This means the staff members especially field officers
should be having proper training as to how to make the illiterate and uneducated clients financially
literate.
In case of the eighth factor, management information system, factor loading is the highest for the
sub factor, MIS system (0.956) followed by governance problem. The reason for the same is the
majority of MFIs are relatively small in size, due to which the use of sophisticated MIS tools are not
in much use. Due to less number of computers the use of software package is limited. Another
reason is that sophisticated tools costs high which these small MFIs could not able to afford.
It can be seen that in the ninth factor, institutional goals, factor loading is highest for development of
mind set of staff (0.796) followed by education and skill-set of staff member (0.643) indicates that
the MFIs are facing problems regarding availability of trained staff with mindset.
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6.5 Hypothesis Testing 6.5.1 Hypothesis formulated based on Legal Entities as factor wise.
H11: Difference in legal entities has influence upon financial issues as a factor faced by MFIs.
H12: Difference in legal entities has influence upon operational Issues as a factor faced by MFIs.
H13: Difference in legal entities has influence upon social impact as a factor faced by MFIs.
H14: Difference in legal entities has influence upon sustainability as a factor faced by MFIs.
H15:. Difference in legal entities has influence upon external issues as a factor faced by MFIs.
H16: Difference in legal entities has influence upon expansion as a factor faced by MFIs.
H17: Difference in legal entities has influence upon financial literacy as a factor faced by MFIs.
H18: Difference in legal entities has influence upon management information system as a factor
faced by MFIs.
H19: Difference in legal entities has influence upon institutional goal as a factor faced by MFIs.
Table 6 Hypothesis tested based on Legal Entities
Items Legal Entity N Mean Sig.
Level df. F
Value Null
Hypothesis
Financial Issues
Trust 3 3.18
0.005 74 4.62 NA
Society 31 3.091 Section 25 Company 9 3.59 NBFC 32 3.979
Operational
Issues
Trust 3 1.933
0.003 74 5.05 NA
Society 31 3.123 Section 25 Company 9 2.467 NBFC 32 3.519
H R issues
Trust 3 2.533
0.689 74 0.491 A
Society 31 3.019 Section 25 Company 9 2.844 NBFC 32 2.956
Social Issues
Trust 3 3.777
0.002 74 5.46 NA
Society 31 3.451 Section 25 Company 9 2.734 NBFC 32 2.248
External issues
Trust 3 2.903 0.001 74 5.625 NA Society 31 3.066
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Section 25 Company 9 3.987 NBFC 32 3.827
Expansion
Trust
3
3.073
0.113
74
2.059
A Society 31 2.938 Section 25 Company 9 2.993 NBFC 32 2.678
Financial literacy
Trust 3 2.967
0.185 74 1.65 A Society 31 2.997 Section 25 Company 9 3.000 NBFC 32 2.759
Management
Information System
Trust 3 3.033
0.013 74 4.93 NA Society 31 2.971 Section 25 Company 9 2.192
NBFC 32 2.014
Institutional Goals
Trust 3 3.167
0.931 74 0.148 A Society 31 2.903 Section 25 Company 9 2.889 NBFC 32 2.828
Source: Own data calculated using SPSS
It can be inferred that the difference in legal entities has influence upon Financial issues, Operational
Issues, social issues, External issues and Management Information System, as a factor faced by
MFIs, as null hypothesis is fail to accept because p value is less than significance level of 0.05
(Table 6). Further it can be seen that MFIs having legal entity NBFCs and Section 25 Company are
facing more perceived challenge in factor Financial Return; NBFCs are facing more perceived
challenge in factor Operational Issues. MFIs having legal entity Trust and Society are facing more
perceived challenge in factor sustainability. MFIs having legal entity NBFC and Section 25
Company are facing more perceived challenge in case of external factors as factor. The reason could
be the uncertainty prevailing among MFIs due the scams in Andhra Pradesh. Loan procedures have
become even tough. Banks are under scrutiny regarding loan disbursement to MFIs; moreover due
to the entry of more MFIs in market, competition is becoming tough. MFIs having legal entity Trust
and Society are facing more perceived challenge in factor Management Information System.
All other factors i.e. social impact, expansion, financial literacy and institutional goals show
insignificant relationship, as there p value is more than 0.05.
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6.5.2 Hypothesis developed based on objectives of microfinance institutions as factor wise. H21: Difference in objectives of Microfinance Institutions has influence upon financial issues as a
factor faced by MFIs.
H22: Difference in objectives of Microfinance Institutions has influence upon operational Issues as a
factor faced by MFIs.
H23: Difference in objectives of Microfinance Institutions has influence upon social impact as a
factor faced by MFIs.
H24: Difference in objectives of Microfinance Institutions has influence upon sustainability as a
factor faced by MFIs.
H25: Difference in objectives of Microfinance Institutions has influence upon external issues as a
factor faced by MFIs.
H26: Difference in objectives of Microfinance Institutions has influence upon expansion as a factor
faced by MFIs.
H27: Difference in objectives of Microfinance Institutions has influence upon financial literacy as a
factor faced by MFIs.
H28: Difference in objectives of Microfinance Institutions has influence upon management
information system as a factor faced by MFIs.
H29: Difference in objectives of Microfinance Institutions has influence upon institutional goal as a
factor faced by MFIs.
Table 7 Hypothesis tested based Objectives
Items Importance of Objective N Mean
Sig. Level df.
F Value
Null Hypothesis
Financial Issues
0-100% 6 2.361
0.00 74 7.49 NA
20%-80% 24 3.206 40%-60% 28 3.396 60%-40% 15 3.335 80%-20% 2 3
Operational Issues
0-100% 6 2.543
0.001 74 5.533 NA
20%-80% 24 3.432 40%-60% 28 2.68 60%-40% 15 3.271 80%-20% 2 2.8
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H R issues
0-100% 6 2.4
0.031 74 2.82 NA
20%-80% 24 3.084 40%-60% 28 2.847 60%-40% 15 3.282 80%-20%- 2 2.4
Social issues
0-100% 6 2.426
0.004 74 4.22 NA
20%-80% 24 1.982 40%-60% 28 2.932 60%-40% 15 2.804 80%-20% 2 3
External issues
0-100%
6
2.431
0.004
74
4.255
NA
20%-80% 24 2.926 40%-60% 28 2.964 60%-40% 15 3.174 80%-20% 2 2.8
Expansion
0-100% 6 2.417
0.014 74 3.369 NA
20%-80% 24 2.665 40%-60% 28 2.914 60%-40% 15 3.088 80%-20% 2 2.73
Financial literacy
0-100% 6 2.457
0.023 74 3.412 NA
20%-80% 24 2.79 40%-60% 28 2.937 60%-40% 15 3.129 80%-20% 2 2.8
Management Information
System
0-100% 6 2.42
0.013 74 3.486 NA
20%-80% 24 2.73 40%-60% 28 2.928 60%-40% 15 3.107 80%-20% 2 2.75
Institutional Goals
0-100% 6 2.714
0.025 74 3.738 NA
20%-80% 24 2.658 40%-60% 28 2.983 60%-40% 15 3.059 80%-20% 2 2.5
Source: Own data calculated using SPSS
It can be inferred that the difference in objectives of Microfinance Institutions has influence upon all
factors i.e. Financial Issues, Operational Issues, Human Resource issues, Social issues, External
Factors, Expansion, Financial Literacy, Management Information System and Institutional Goals as
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a factor faced by MFIs, since p value is less than significance level of 0.05, null hypothesis is fail to
be accepted. In other words alternative hypothesis is accepted that, the is difference in objectives of
Microfinance Institutions has influence upon all nine factors faced by MFIs. Based on literature
review, the percentage distribution between outreach and sustainability can be, 0%-100% indicate
focus is only on sustainability, 20%-80% is 20% outreach and 80 % sustainability, 40%-60% is 20%
outreach and 80 % sustainability, 60% - 40% is 60% outreach and 40 % sustainability, 80% - 20% is
80% outreach and 20 % sustainability.
For the factor, Financial Issues, it is observed that the highest mean value (3.396) is for 40%-60%
objective type which indicated that the MFIs should focus more on the 40%-60% combination of
objective, followed by 60%-40% combination of objective. All the factors show significant
relationship, except factor, operational issues and HR issues, as there p value is less than 0.05, the
significance level of 5 per cent. Further it can be stated that MFIs are giving more importance to self
–sufficiency as an objective in factors Financial issues, Operational Issues, H R issues, External
factors, Expansion, Financial literacy and Management Information System, where as in factor
Sustainability, more importance is given to client coverage as an objective (80 percent).
6.5.3 Hypothesis based on available opportunities in providing microfinance H31: There is significant difference in the perceived available opportunities for all types of
businesses among trust as legal entity.
H32: There is significant difference in the perceived available opportunities for all types of
businesses among society as legal entity.
H33: There is significant difference in the perceived available opportunities for all types of
businesses among section 25 company as legal entity.
H34: There is significant difference in the perceived available opportunities for all types of
businesses among NBFC as legal entity.
H35: There is significant difference in the perceived available opportunities for all types of
businesses among legal entity as a whole.
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H36: There is significant difference in the perception of MFIs’ regarding their effectiveness against
poverty among trust as legal entity.
H37: There is significant difference in the perception of MFIs’ regarding their effectiveness against
poverty among society as legal entity.
H38: There is significant difference in the perception of MFIs’ regarding their effectiveness against
poverty among section 25 company as legal entity.
H39: There is significant difference in the perception of MFIs’ regarding their effectiveness against
poverty among NBFC as legal entity.
H310: There is significant difference in the perception of MFIs’ regarding their effectiveness against
poverty among legal entity as a whole.
H311: There is significant difference in the perception of MFIs for promoting economic growth
among trust as legal entity.
H312: There is significant difference in the perception of MFIs for promoting economic growth
among society as legal entity.
H313: There is significant difference in the perception of MFIs for promoting economic growth
among section 25 company as legal entity.
H314: There is significant difference in the perception of MFIs for promoting economic growth
among NBFC as legal entity.
H315: There is significant difference in the perception of MFIs for promoting economic growth
among legal entity as a whole.
H316: There is significant difference in perception about MFI’s being effective in poverty purge
among trust as legal entity.
H317: There is significant difference in perception about MFI’s being effective in poverty purge
among society as legal entity.
H318: There is significant difference in perception about MFI’s being effective in poverty purge
among section 25 company as legal entity.
H319: There is significant difference in perception about MFI’s being effective in poverty purge
among NBFC as legal entity.
H320: There is significant difference in perception about MFI’s being effective in poverty purge
among legal entity as whole.
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H321: There is significant difference in the perception of MFIs’ regarding working in partnership
with commercial banks among trust as legal entity.
H322: There is significant difference in the perception of MFIs’ regarding working in partnership
with commercial banks among society as legal entity.
H323: There is significant difference in the perception of MFIs’ regarding working in partnership
with commercial banks among section 25 company as legal entity.
H324: There is significant difference in the perception of MFIs’ regarding working in partnership
with commercial banks among NBFC as legal entity.
H325: There is significant difference in the perception of MFIs’ regarding working in partnership
with commercial banks among legal entity as whole.
Table 8 Descriptive Statistics
N Mean Std.
Deviation Std. Error
95% Confidence Interval for Mean
Minimum Lower
Bound Upper Bound
Promote all kinds of business
1 3 2.00 1.04 0.13 2.00 2.00 2.0 2 31 2.16 1.27 0.23 2.70 3.63 1.0 3 9 3.67 0.71 0.24 3.12 4.21 2.0 4 32 3.94 0.84 0.15 3.63 4.24 2.0
Total 75 3.51 1.11 0.13 3.25 3.76 1.0
Effective against poverty
1 3 5.00 2.30 0.00 5.00 5.00 5.0 2 31 3.39 1.26 0.23 2.93 3.85 1.0 3 9 4.00 0.50 0.17 3.62 4.38 3.0 4 32 4.03 0.78 0.14 3.75 4.31 2.0
Total 75 3.80 1.04 0.12 3.56 4.04 1.0
Promote economic growth
1 3 4.00 0.00 1.04 4.00 4.00 4.0 2 31 3.45 1.31 0.24 2.97 3.93 1.0 3 9 4.67 0.71 0.24 4.12 5.21 3.0 4 32 4.47 0.92 0.16 4.14 4.80 2.0
Total 75 4.05 1.17 0.14 3.78 4.32 1.0
Aim not only poverty
purge
1 3 2.00 0.00 0.00 2.00 2.00 2.0 2 31 3.00 1.37 0.25 2.76 3.76 1.0 3 9 4.44 1.13 0.38 3.58 5.31 2.0 4 32 4.96 1.01 0.18 4.04 4.77 2.0
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Total 75 3.84 1.34 0.15 3.53 4.15 1.0
Partnership between Banks &
MFIs
1 3 5.00 0.00 0.00 5.00 5.00 5.0 2 31 3.45 1.31 0.24 2.97 3.93 1.0 3 9 4.00 0.50 0.17 3.62 4.38 3.0 4 32 4.03 0.78 0.14 3.75 4.31 2.0
Total 75 3.83 1.06 0.12 3.58 4.07 1.0 Source: Own data calculated using SPSS
It can be observed that mean value is more than 3 on a scale of 1 to 5, with 1 indicating strong
disagreement and 5 indicating strong agreement with the available opportunities. From the table it
can be seen that, for three types of Legal Entity i.e. Society (3.16), Section 25 Company (3.67) and
NBFC (3.94) agreeing that MFIs promote all kinds of business as mean value is higher than 3,
whereas Trust (2.00) disagrees with the same which indicates that the people involved in running the
trust do not have similar perception regarding entry into different types of business. Statement
regarding microfinance institutions are effective tool against poverty response, table shows that all
four types of legal entity strongly believes that microfinance institutions promote economic growth
i.e. Trust (4.00) Society (3.45), Section 25 Company (4.67) and NBFC (4.47). Response is mixed
for the statement, Microfinance Institution’s aim is not only poverty purge as Section 25 Company
(4.44) and NBFC (4.41) strongly believes the same. The reason is that they have to balance between
sustainability and outreach. Whereas trust (2.00) emphasizes more on outreach and the response of
Society (3.00) is neutral in this regard. Finally all four legal entities strongly believe that partnership
between commercial banks & MFIs definitely helps in meeting the institution’s objectives.
Table 9: Test of Homogeneity of Variances
Levene Statistic df1 df2
Promote all kinds of business
4.947 3 71 Effective against poverty
7.675 3 71
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Promote economic growth
5.663 3 71 Aim not only poverty purge
3.838 3 71 Partnership between Banks & MFIs
9.19 3 71 Source: Own data calculated using SPSS
From the table no 9, it can be seen that the p value (0.062, 0.123, 0.062, 0.213, and 0.112) for all
objective is greater than α level (0.05) for Test of Homogeneity of Variances, and thereby it fail to
reject H0 which increases the confidence that the variances are equal and the homogeneity of
variance assumption has been met.
From the table no. 10, it can be seen that since p value is less than significance level of 0.05, we fail
to accept Null Hypothesis. Hence, Alternative hypothesis is accepted i.e. there is significant
difference in the perceived available opportunities among different legal entities. Hence, MFIs’
promote all kinds of Business, Partnership between commercial banks & MFIs, MFIs promote
economic growth, MF’s aim is not only poverty purge and MFIs’ most effective against poverty
among different legal entities like Trust, Society, Section 25 Companies and NBFCs.
Table 10: ANOVA Summary Sheet
Sum of Squares df
Mean Square F Sig.
Promote all kinds of
business
Between Groups
(Combined) 16.68 3 5.56 5.33 0 Linear Term
Unweighted
11.66 1 11.66 11.17 0 Weighted
15.06 1 15.06 14.44 0 Deviation 1.62 2 0.81 0.78 0.46
Within Groups 74.07
71 1.04
Total 90.75
74
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Effective against poverty
Between Groups
(Combined) 11.68 3 3.89 4.05 0.01 Linear Term
Unweighted
1.54 1 1.54 1.6 0.21 Weighted
2.26 1 2.26 2.35 0.13 Deviation 9.41 2 4.71 4.89 0.01
Within Groups 68.32
71 0.96
Total 80
74
Promote economic growth
Between Groups
(Combined) 20.14 3 6.71 5.84 0.13 Linear Term
Unweighted
2.01 1 2.01 1.75 0.19 Weighted
13.94 1 13.94 12.13 0.11 Deviation 6.2 2 3.1 2.69 0.07
Within Groups 81.65
71 1.15
Total 101.79
74
Aim not only
poverty purge
Between Groups
(Combined) 34.2 3 11.4 8.27 0 Linear Term
Unweighted
20.63 1 20.63 14.96 0 Weighted
29.84 1 29.84 21.64 0 Deviation 4.37 2 2.18 1.58 0.21
Within Groups 97.88
71 1.38
Total 132.08
74
Partnership between Banks &
MFIs
Between Groups
(Combined) 10.1 3 3.37 3.29 0.03 Linear Term
Unweighted
1.62 1 1.62 1.59 0.21 Weighted
1.66 1 1.66 1.62 0.21 Deviation 8.44 2 4.22 4.13 0.02
Within Groups 72.65
71 1.02
Total 82.75
74
Source: Own data calculated using SPSS
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From the table no. 10, it can be seen that since p value is less than significance level of 0.05, we fail
to accept Null Hypothesis. Hence, Alternative hypothesis is accepted i.e. there is significant
difference in the perceived available opportunities among different legal entities.
Taking all legal entities as a whole, the observed significance level is less than 0.05 indicating
significant difference in the perceived available opportunities for all types of businesses. For
unweighted means, the observed significance level is level is less than 0.05 indicating that even if
different types of legal entities have equal presence across the economy, there is significant
difference in the perceived available opportunities for all types of businesses. For weighted means,
the observed significance level is level is less than 0.05 indicating that if different types of legal
entities are proportionately present across the economy, there is significant difference in the
perceived available opportunities for all types of businesses. This indicates that trust and society are
majorly focusing more on microcredit activity whereas NBFC and Section 25 Company focusing
more on providing more services than merely providing microcredit. They are also providing
personal loan, group loan, vehicle loan, farm equipment loan, consumer durable loans, insurance
product etc.
Statement regarding microfinance institutions are effective tool against poverty response, table
shows that all four types of legal entity strongly believes that microfinance institutions promote
economic growth i.e. Trust (4.00) Society (3.45), Section 25 Company (4.67) and NBFC (4.47).
Taking all legal entities as a whole the observed significance level is less than 0.05 indicating
significant difference in the perception of MFIs’ regarding their effectiveness against poverty. For
unweighted means, the observed significance level is level is greater than 0.05 indicating that if
different types of legal entities have equal presence across the economy, there is not much
significant difference in the perception of MFIs’ regarding their effectiveness against poverty. For
weighted means, the observed significance level is level is greater than 0.05 indicating that if
different types of legal entities are proportionately present across the economy, there is not much
significant difference in the perception of MFIs’ regarding their effectiveness against poverty. This
implies that all the type legal entities perceive that microfinance is effective tool in reducing poverty.
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Taking all legal entities as a whole the observed significance level is less than 0.05 indicating
significant difference in the perception of MFIs for promoting economic growth. For unweighted
means, the observed significance level is level is greater than 0.05 indicating that if different types
of legal entities have equal presence across the economy, there is not much significant difference in
the perception of MFIs’ for promoting economic growth. For weighted means, the observed
significance level is level is less than 0.05 indicating that if different types of legal entities are
proportionately present across the economy, there is significant difference in the perception of MFIs’
for promoting economic growth. This implies that all the type legal entities are having the same
opinion that microfinance institutions definitely help in promoting economic growth of country.
Taking all legal entities as a whole the observed significance level is less than 0.05 indicating
significant difference in the perception of MFIs for not only focusing on outreach but also focusing
on sustainability (MF’s aim is not only poverty purge). For unweighted means, the observed
significance level is level is less than 0.05 indicating that even if different types of legal entities have
equal presence across the economy, there is significant difference in the perception of MFIs for not
only focusing on outreach but also focusing on sustainability. The reason for the same is because
NBFCs and Section 25 Company are focusing more on sustainability whereas society focuses on
both, sustainability and outreach. For weighted means, the observed significance level is level is less
than 0.05 indicating that if different types of legal entities are proportionately present across the
economy, there is significant difference in the perception of MFIs for not only focusing on outreach
but also focusing on sustainability.
Taking all legal entities as a whole the observed significance level is less than 0.05 indicating
significant difference in the perception of MFIs’ regarding working in partnership with commercial
banks for smooth functioning of MFIs. For unweighted means, the observed significance level is
level is greater than 0.05 indicating that if different types of legal entities have equal presence
across the economy, there is not much significant difference in the perception of MFIs’ regarding
working in partnership with commercial banks for smooth functioning of MFIs. For weighted
means, the observed significance level is level is greater than 0.05 indicating that if different types
of legal entities are proportionately present across the economy, there is not much significant
Microfinance Delivery: Challenges & Innovative Strategies of Microfinance Institutions of Ahmedabad & Gandhinagar City
153
difference in the perception of MFIs’ regarding working in partnership with commercial banks for
smooth functioning of MFIs. This implies that all the type legal entities are strongly having the
same opinion that partnership with banks would support in better functioning of their microfinance
activity.
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