Assessing the Impact of Government Regulations on Microfinance Banks (MFBs) Performance
Keywords:Microfinance bank, Government regulation, Capitalization, Reserves, Performance, Central Bank of Nigeria.
After several reforms in Nigerian banking sub-sector, the regulatory and supervisory framework policy of Central Bank of Nigeria (CBN) has not adequately improved performance of Microfinance banks (MFBs). In view of this, this paper assessed the impact of government regulations on MFBs performance between 2007- 2016. The paper used secondary source of data by assessing the financial statements of MFBs. A pooled Ordinary Least Square (OLS) technique was used for the analysis of data. The result showed that coefficient values of capitalization (4.64) and reserve (7.21) were positive and consistently associated with higher MFBs performance, while investment in Treasury bill (-4.30) was negative but statistically significant in driving MFBs performance at (P<0.01). The study concluded that regulatory frameworks via strong capitalization and reserves influenced and improved MFBs financial performance.