Impact of Size and Age on Firm Performance: Evidences from Microfinance Institutions in Tanzania

Abstract

The aim of the study was to examine the impact of firm size and age on performance of Microfinance institutions in Tanzania. The study uses panel data of five years and 30 Microfinance institutions operating in the country.

The findings of the study show the presence of the positive impact of firm size measured by total asset and number of borrowers on the performance of Microfinance institutions in the country. On the other hand, the study found out that firm size measured by the number of staff was negatively related to the efficiency sustainability and profitability of Microfinance institutions reviewed. The findings of the study also show that the age of the firms which indicates firm experience have a positive impact on efficiency, sustainability and financial revenue levels but have a negative impact on the profitability of Microfinance institutions reviewed. From these findings, the study concludes that both firm size and age have an impact on Microfinance performance in Tanzania in terms of efficiency, sustainability, profitability and revenue generation capacity.

The study recommends that, due to the fast growth of the Microfinance sector in Tanzania, with increases in small and medium Microfinance institutions, the government and policy makers should create a good environment for the growth of these institutions. Better policies should be create which to facilitate growth and hence the performance of Microfinance institutions in the country. To the managers of Microfinance institutions, the study recommend that, they should monitor the institution's growth to ensure that both size and age increase with firm performance.

Keywords: Size, Age, Firm Performance, Microfinance Institutions