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The Effect of Institutional Social Capital on Sustainable Performance of Microfinance Banks in Nigeria

Author

Listed:
  • Ugochukwu M. Ezeh
  • Ana Marr
  • Navjot Sangwan
  • Luca Tasciotti

    (University of Greenwich)

Abstract

This study investigates the influence of institutional social capital on the sustainable performance of microfinance banks (MFBs) in Nigeria, with loan performance as the primary indicator. A quantitative descriptive survey was conducted to evaluate institutional social networks, norms of reciprocity, and institutional trust. Primary data were collected from 450 managers, loan officers, and credit officers in chosen microfinance banks and examined using Structural Equation Modelling (SEM) utilising the PLS-SEM technique. Research indicates that institutional trust and norms of reciprocity substantially enhance loan performance, underscoring the significance of trust and collaboration in maintaining lending results. Nonetheless, institutional social networks adversely impacted performance, highlighting difficulties in network dynamics. The study advocates for the fortification of trust-based relationships and the proficient management of social capital to improve performance and stability.

Suggested Citation

  • Ugochukwu M. Ezeh & Ana Marr & Navjot Sangwan & Luca Tasciotti, 2025. "The Effect of Institutional Social Capital on Sustainable Performance of Microfinance Banks in Nigeria," The African Finance Journal, Africagrowth Institute, vol. 27(2), pages 15-40.
    • Handle: RePEc:afj:journl:v:27:y:2025:i:2:p:15-40
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-finj_v27_n2_a2
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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