BOHR International Journal of Business Ethics and Corporate Governance

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.