Institutional framework in developing economies Do all dimensions matter for financial intermediation by microfinance deposit-taking institutions?
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Date
2018
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Financial Regulation and Compliance
Abstract
The purpose of this paper is to establish the relationship between institutional framework of
regulative (formal rules), normative (informal norms) and cultural-cognitive (cognition), and their effects on
financial intermediation by microfinance deposit taking institutions (MDIs) in developing economies like
Uganda.
Design/methodology/approach – Data collected from a total sample of 400 poor households and 40
relationship officers located in rural Uganda were processed using statistical package for social sciences and
analysis of moment structures to establish the relationship between institutional framework of regulative,
normative and cultural-cognitive, and their effects on financial intermediation by MDIs in developing
economies.
Findings – The results showed that the three dimensions of regulative (formal rules), normative (informal
norms) and cultural-cognitive (cognition) significantly affect financial intermediation by MDIs in developing
economies like Uganda. In addition, as a unique finding, two new dimensions of procedural and declarative
cognition emerged from cultural-cognitive framework to determine financial intermediation among MDIs in
developing economies, specifically in Uganda.
Research limitations/implications – The study collected data from only poor households and
relationship officers located in rural Uganda. It ignored peri-urban and urban areas in Uganda. In addition, the
study focused only on MDIs and ignored other financial institutions. Besides, the study was purely
quantitative, therefore, further research through interviews may be useful in future. Furthermore, the study
was carried out in rural Uganda as a developing economy. Thus, future research using the same variables in
other developing economies may be useful.
Practical implications – Managers of
Description
Keywords
Structural equation modeling, Developing economies, Financial intermediation, Institutional framework, Microfinance deposit taking institutions, Rules of the game
Citation
Bongomin, G. O. C., Malinga, C. A., Munene, J. C., & Ntayi, J. M. (2018). Institutional framework in developing economies: Do all dimensions matter for financial intermediation by microfinance deposit-taking institutions?. Journal of Financial Regulation and Compliance.