Impact of Loan Delinquency, Loan Loss Provision and Capital Adequacy on the Financial Performance of Microfinance Institutions in the Rural Area of Bamenda Region: The Case of Jakiri Cooperative Credit Union Ltd (JACCUL)

ABSTRACT : This study examines the impact of loan delinquency, loan loss provision and capital adequacy on the financial performance of microfinance institutions (MFIs) in the rural area of Bamenda region with Jakiri Cooperative Credit Union Ltd (JACCUL) as the case study. The study made use of secondary data such as; the levels of non-performing / delinquent loans, net income, equity capital, total assets and loan loss provision which were obtained from the audited annual financial statements of JACCUL. The sample size used for the study was five years and the data was extracted from five audited annual financial statements of JACCUL. The study made use of descriptive analysis, trend analysis, correlation technique and regression analysis to anlayse the data collected. The study findings indicated a strong negative statistically significant impact of; loan delinquency (non-performing loans), and loan loss provision on the financial performance (ROE) of MFIs. Further results showed that loan loss provision is significantly positively correlated with non-performing loans. The study recommends that JACCUL should strengthen supervision to prevent an increase in non-performing loans (NPLs) in the future, maintain high credit standards and respect their loan or credit policy so as to continuously maintain a healthy loan portfolio which will increase its financial performance.