Determinant of profitability in the Kosovo Microfinance Institutions

In this study we assess the determinants of profitability in the microfinance institutions. The microfinance institution became very important to marginalized groups, they finance their endeavor that banks are uninterested. During this time the microfinance institutions managed to increases their capital substantially by being very profitable and as result slowly they started to move in to the turf of the banks. The results reveal that the business loans are the most contributors to profitability in the microfinance. In terms of the cost, the labor cost affects profitability negatively mostly, showing that labor cost are important factors. Non-performing loans does not have any effect on profitability. We have used secondary data from the Kosovo Central Bank for year 2015 – 2019. The method we used are pooled, fixed effect and random effect, moreover, we did a hausman test in order to test which method is more appropriate