Determinants of intermediation model of microfinance institutional operations in uganda

The main role of financial institutions is to facilitate the flow of funds from the saving units to the borrowing units and they include commercial banks and microfinance institutions amongst the depository institutions. The study investigated the relationship between microfinance savings mobilization and loans deployment at institutional level. A panel of secondary data was pooled on the intermediation role of microfinance institutions in Acholi sub region as partitioned into seven districts. The basic model for the analysis of data was the Pooled Regression Model. The key determinants of financial intermediation at institutional microfinance level were the savings mobilized, the capitalization funds and the willingness to borrow which were all significant at . Debt repayment which may be unmatched with additional capital funds had a negative effect on loan deployment. Whole sale capital funds to microfinance institutions should be lent on longer term duration to complement savings mobilized and equity funds to create greater impact to the community across the sub region. Savings mobilization drive should remain a central focus to increase loanable funds. The borrowers are the major driver to loan deployment, hence strict criteria for eligibility should be met at implementation stage.