Abstract:

Micro Lenders play a vital role in the sustainability of the economy of Nigeria as they provide finances to SMEs whose contributions to the national GDP amounts to 48%. The study of their financial performance has become vital to the progress of the SMEs and the nation at large. This study set out to evaluate the financial performance of 10 Non-Banks Micro Lenders in Lagos from 2015-2020. The study set out to answer the following questions i. to examine the internal factors on financial Performance of 10 Micro Finance Banks ii.to find out if the relationship between financial performance and the variables are negative or positive. iii. To offer suggestions on how to improve financial performance of Non-Bank Lenders. The empirical analysis used in this study was panel regression on the R statistical system. Since the data chosen for this study contained companies with corresponding years, panel data analysis was used. The findings of the study revealed that i. the financial performance of banks in terms of return on assets benefit from the scale of economies but not significantly, probably because of poor monitoring and supervision and due to inefficient management of their resources by the MFBs. ii. Another discovery made was that capital adequacy exerts a positive and significant effect on return on asset. iii. It was also discovered that non-performing loans exerts a negative and significant effect on return on assets iv. Liquidity risk exerts a positive and insignificant effect on return on asset. v. The last discovery reveals that cost efficiency exerts a negative and significant effect on return on asset to. In the light of the findings, which revealed that the administrative processes amongst other factors had an impact on the microlenders performance. Hence, in other to improve the Financial Performance of Microfinance Banks, this study recommends that they must- i. Increase their monitoring and supervision of return on Assets. ii. Get larger equity capital to avoid liquidation crisis. iii. Improve their loan pay back strategies iv. Increase their liquidity v. Work on their cost to income ratio to increase efficiency.