Effect of Capital Structure on the Performance of Microfinance Institutions in Oman

Abstract

The primary objective of this study is to determine the relationship between effect of capital structure and performance of microfinance institutions in Oman. In this research, a questionnaire was used to obtain the results and the qualitative study where the qualitative data were collected through primary date. The target group to answer this questionnaire was from the owners of microfinance in Oman, and 10 answers were obtained. The results showed that there is a positive relationship between capital structure and performance of microfinance. The capital structure is important in improving the performance of microfinance and maintaining its proper management. It also leads to improved performance, which results in an increase in profit, the correct management of expenses, and a reduction in losses. Empirical results indicate that effective use and creation of social capital is vital to improving the effects of microfinance and that the owners of microfinance should focus more on harmonious social relationships and deliberately building social capital. In addition, the microfinance owners should work with a plan to reduce expenses and increase profitability, as well as recognize the correct management of capital structure. They should understand the structure of capital and the positive impact on the performance of microfinance