The Effect of Loan Diversification on The Performance of Microfinance Institutions in Bamenda Cameroon

Abstract : Diversification in financial sector is crucial in the sense that it helps to reduce the level of risk facing by the sector especially in the area of loan. In the financial sector, microfinance institutions are more expose to the problem of loan management, it is for that reason that this article tried to investigate and analyze the effect of loan diversification on the performance of microfinance institutions in Bamenda Cameroon. To reach our objective, the article make use of primary data collected from 35 microfinance institution in bamenda. 70 structured questionnaires were administered to manager and loan officer who were selected randomly. Data were analyzed using descriptive and inferential analysis.The findings indicate that MFIs with loan diversification tend to exhibit better financial performance and lower risk levels, suggesting that diversification is a viable strategy for enhancing the stability and profitability of microfinance institutions.