Business Model Innovation and the Performance of Microfinance Banks in North Central, Nigeria

Abstract

Business Model Innovation is believed to have the capacity to improve the performance of small firms especially those in the service sector like the Microfinance banks (MFBs). However, the review of extant literature revealed that there is a paucity of empirical studies investigating the effect of Business Model Innovation (BMI) on MFBs performance in North-Central, Nigeria. Therefore, to fill these gaps in literature, the study investigated the effect of BMI on MFB performance in North - Central Nigeria. To do this, the study used a structured questionnaire to source primary data from 301 sampled MFBs across the states in North-Central Nigeria inclusive of Abuja utilizing a multi-stage sampling technique. The study employed both descriptive statistics and Structural Equation Modelling (SEM) The result showed that value creation (β=-0.061; p=0.738) and value capture (β= -0.056; p = 0.469) have insignificant negative effects on the performance of MFBs, while value proposition (β= 0.143; p=0.555) has an insignificant positive effect on MFBs’ performance, leading to the conclusion that BMI has no significant direct effect on MFB performance in North -Central Nigeria. The study recommends among others the entrenchment of a continuous practice of BMI by MFBs in the study area to enhance their performance.