Navigating the Cascading Ripples: A Study on the Interplay between the COVID-19 Recession and the Financial Fortunes of Micro Finance Institutions (MFIs)

Main Article Content

Santhosh Kumar K.
Aithal P. S.

Abstract

Purpose: The success of Micro Finance Institutions (MFIs) hinges on effective decision-making amidst challenging economic circumstances, necessitating the ability to anticipate and navigate future business conditions. This research aims to explore the relationship between financial performance and the COVID-19 pandemic's impact on MFIs listed on the National Stock Exchange (NSE) in India. By analyzing financial data and employing statistical techniques, the study seeks to elucidate the resilience of MFIs during the pandemic and the role of financial ratios in predicting earnings per share (EPS). Additionally, the research aims to contribute to a deeper understanding of the interplay between financial indicators and organizational outcomes within the microfinance sector.


Design/Methodology/Approach: This research adopts a quantitative approach, utilizing secondary data obtained from quarterly financial reports of selected MFIs listed on the NSE from 2018 to 2022. Statistical analyses such as paired t-tests, correlation, and regression are employed to assess the impact of the COVID-19 pandemic recession on MFIs' profitability and to investigate the relationship between financial ratios and earnings per share (EPS).


Findings/Result: Despite the COVID-19 pandemic recession, the profitability of Indian Micro Finance Institutions (MFIs) remained largely unaffected, as indicated by non-significant differences in earnings before interest and taxes (EBIT) before and after the pandemic. Regression analysis highlighted significant influences of financial ratios like the current ratio, total asset ratio, net profit ratio, and gross profit ratio on earnings per share (EPS), underscoring the sector's resilience and the importance of financial analysis in predicting MFI performance.


Originality/Value: This research offers novel insights into the resilience of Indian Micro Finance Institutions (MFIs) during the COVID-19 pandemic and underscores the significance of financial analysis in guiding strategic decision-making processes within the microfinance sector.


Paper Type: Empirical Research.

Article Details

How to Cite
Santhosh Kumar K., & Aithal P. S. (2024). Navigating the Cascading Ripples: A Study on the Interplay between the COVID-19 Recession and the Financial Fortunes of Micro Finance Institutions (MFIs). International Journal of Applied Engineering and Management Letters (IJAEML), 8(2), 145–155. https://doi.org/10.47992/IJAEML.2581.7000.0227
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