IDEAS home Printed from https://ideas.repec.org/a/nap/nijefr/2020p56-62.html
   My bibliography  Save this article

Firm Size And Performance: An Econometric Analysis Of The Financial Performance Of Deposit Taking Microfinance Institutions In Kenya

Author

Listed:
  • Jonathan Mwau Mulwa

    (Department of Business Studies, Rongo University, Kenya)

Abstract

Firm size has been a dominant control variable in most cost finance studies involving organizational performance where it has been used as proxy for corporate competitiveness. However, its isolated effect on performance has been ignored. Resource Based View theory and Efficient Structure hypothesis has anticipated its contribution to performance by proposing a beneficial link between size and organizational. This notwithstanding, empirical evidence on the effect of firm size on performance is mixed. On this basis, therefore, this paper investigates the effect of firm size on the financial performance of deposit taking microfinance institutions in Kenya using both a static and a dynamic panel data model. The study has secondary data over the period 2011 to 2018 on six institutions. On the static model the study finds a positive influence of total assets on financial performance while customers’ deposits did not significantly influence financial performance. On a dynamic model, the study finds a significant positive influence of one year lagged financial performance on the contemporaneous financial performance of deposit taking microfinance institutions.

Suggested Citation

  • Jonathan Mwau Mulwa, 2020. "Firm Size And Performance: An Econometric Analysis Of The Financial Performance Of Deposit Taking Microfinance Institutions In Kenya," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 5(5), pages 56-62, May.
    • Handle: RePEc:nap:nijefr:2020:p:56-62
    as

    Download full text from publisher

    File URL: https://www.napublisher.org/pdf-files/NIJEFR-5(5)-56-62.pdf
    Download Restriction: no
    File URL: https://www.napublisher.org/?ic=journal&journal=5&month=05-2020&issue=5&volume=5
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marvin B. Lieberman & David B. Montgomery, 1988. "First‐mover advantages," Strategic Management Journal, Wiley Blackwell, vol. 9(S1), pages 41-58, June.
    2. Ibrahim Abidemi Odusanya & Olumuyiwa Ganiyu Yinusa & Bamidele M. Ilo, 2018. "Determinants of Firm Profitability in Nigeria: Evidence from Dynamic Panel Models," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 68(1), pages 43-58, January-M.
    3. Aduralere Opeyemi, OYELADE, 2019. "The Impact of Firm Size on Firms Performance in Nigeria: A Comparative Study of Selected Firms in the Building Industry in Nigeria," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(1), pages 1-11.
    4. Aduralere Opeyemi, OYELADE, 2019. "The Impact of Firm Size on Firms Performance in Nigeria: A Comparative Study of Selected Firms in the Building Industry in Nigeria," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(1), pages 1-11, March.
    5. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    6. Homma, Tetsushi & Tsutsui, Yoshiro & Uchida, Hirofumi, 2014. "Firm growth and efficiency in the banking industry: A new test of the efficient structure hypothesis," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 143-153.
    7. Robert M Grant, 1987. "Multinationality and Performance among British Manufacturing Companies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 18(3), pages 79-89, September.
    8. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    9. Aza Ibrahim Eyigege, 2018. "Influence of Firm Size on Financial Performance of Deposit Money Banks Quoted on the Nigeria Stock Exchange," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(9), pages 297-302, 09-2018.
    10. Jonathan Mwau Mulwa & David Kosgei, 2016. "Commercial Bank Diversification and Financial Performance: The Moderating Role of Risk," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 5(2), pages 1-3.
    11. Cynthia A. Montgomery, 1994. "Corporate Diversificaton," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 163-178, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ricarda Schauerte & Stéphanie Feiereisen & Alan J. Malter, 2021. "What does it take to survive in a digital world? Resource-based theory and strategic change in the TV industry," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 45(2), pages 263-293, June.
    2. Wan, Feng & Williamson, Peter & Pandit, Naresh R., 2020. "MNE liability of foreignness versus local firm-specific advantages: The case of the Chinese management software industry," International Business Review, Elsevier, vol. 29(1).
    3. Javier Aguilera-Caracuel & Jaime Guerrero-Villegas & María Dolores Vidal-Salazar & Blanca L. Delgado-Márquez, 2015. "International Cultural Diversification and Corporate Social Performance in Multinational Enterprises: The Role of Slack Financial Resources," Management International Review, Springer, vol. 55(3), pages 323-353, June.
    4. Zhou, Chao, 2023. "Home country environment and the downside risk implications of multinationality: Empirical evidence from Chinese SMEs," Journal of Multinational Financial Management, Elsevier, vol. 69(C).
    5. Felix Oberholzer-Gee & Dennis A. Yao, 2018. "Integrated Strategy: Residual Market and Exchange Imperfections as the Foundation of Sustainable Competitive Advantage," Strategy Science, INFORMS, vol. 3(2), pages 463-480, June.
    6. Peter E. Harland & Zakir Uddin & Sven Laudien, 2020. "Product platforms as a lever of competitive advantage on a company-wide level: a resource management perspective," Review of Managerial Science, Springer, vol. 14(1), pages 137-158, February.
    7. Bruno Michel Roman Pais Seles & Janaina Mascarenhas & Ana Beatriz Lopes de Sousa Jabbour & Adriana Hoffman Trevisan, 2022. "Smoothing the circular economy transition: The role of resources and capabilities enablers," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1814-1837, May.
    8. Arie Y Lewin & Silvia Massini & Carine Peeters, 2020. "Absorptive capacity, socially enabling mechanisms, and the role of learning from trial and error experiments: A tribute to Dan Levinthal’s contribution to international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1568-1579, December.
    9. André de Abreu Saraiva Monteiro Alves & Fernando Manuel Pereira de Oliveira Carvalho, 2022. "How Dynamic Managerial Capabilities, Entrepreneurial Orientation, and Operational Capabilities Impact Microenterprises’ Global Performance," Sustainability, MDPI, vol. 15(1), pages 1-23, December.
    10. Claudio Vitari & Elisabetta Raguseo, 2016. "Big data value and financial performance: an empirical investigation [Digital data, dynamic capability and financial performance: an empirical investigation in the era of Big Data]," Post-Print halshs-01923271, HAL.
    11. Ahmad Ibrahim Aljumah & Mohammed T. Nuseir & Md. Mahmudul Alam, 2021. "Traditional marketing analytics, big data analytics and big data system quality and the success of new product development," Post-Print hal-03538161, HAL.
    12. David G. Sirmon & Michael A. Hitt, 2003. "Managing Resources: Linking Unique Resources, Management, and Wealth Creation in Family Firms," Entrepreneurship Theory and Practice, , vol. 27(4), pages 339-358, October.
    13. Nils Grashof, 2020. "Sinking or swimming in the cluster labour pool? A firm-specific analysis of the effect of specialized labour," Jena Economics Research Papers 2020-006, Friedrich-Schiller-University Jena.
    14. Jim Andersén, 2023. "Green resource orchestration: A critical appraisal of the use of resource orchestration in environmental management research, and a research agenda for future study," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5506-5520, December.
    15. López Zapata, Esteban & García Muiña, Fernando Enrique & García, Susana María, 2019. "Analysing the relationship between diversification strategy and firm performance: the role of the economic cycle," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).
    16. Zhang-Zhang, YingYing & Rohlfer, Sylvia & Varma, Arup, 2022. "Strategic people management in contemporary highly dynamic VUCA contexts: A knowledge worker perspective," Journal of Business Research, Elsevier, vol. 144(C), pages 587-598.
    17. Judith Cavazos-Arroyo & Rogelio Puente-Diaz, 2019. "The Influence of Marketing Capability in Mexican Social Enterprises," Sustainability, MDPI, vol. 11(17), pages 1-15, August.
    18. Rui Baptista & Murat Karaöz & João Correia Leitão, 2020. "Diversification by young, small firms: the role of pre-entry resources and entry mistakes," Small Business Economics, Springer, vol. 55(1), pages 103-122, June.
    19. Michael Sheppard, 2020. "The relationship between discretionary slack and growth in small firms," International Entrepreneurship and Management Journal, Springer, vol. 16(1), pages 195-219, March.
    20. Sanghyun Kim & Bora Kim & Minsoo Seo, 2020. "Impacts of Sustainable Information Technology Capabilities on Information Security Assimilation: The Moderating Effects of Policy—Technology Balance," Sustainability, MDPI, vol. 12(15), pages 1-24, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nap:nijefr:2020:p:56-62. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Managing Editor (email available below). General contact details of provider: https://www.napublisher.org/?ic=journal&journal=5&info=aims .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.