A comparative study of the impact of Covid-19 on the liquidity of selected microfinance finance institutions in Zambia

Abstract

The aim of this paper is to conduct a comparative analysis of the impact of the COVID-19 pandemic on the liquidity of Agora Microfinance Zambia and Microfinance Zambia within Zambia. The study was significant because it showed the impact of the COVID-19 pandemic on the liquidity of microfinance institutions in Zambia. The study used three key proxy variables – cash ratio, quick ratio and net working capital ratio – to identify the relationship between the COVID-19 pandemic and MFI liquidity. COVID-19 was a surrogate for the pandemic during the COVID-19 pandemic period (2019-2021) and the pre-pandemic period (2017-2018). Using the Wilcoxon statistical testing tool, a hypothesis was developed to guide the investigation and perform a statistical test of the parameter estimates. The study employed a longitudinal research design and utilized data from the audited financial statements of microfinance institutions. Data were analyzed using STATA and Excel. It was found that the lockdowns imposed to contain the spread of the COVID-19 virus had less impact on the liquidity of the two microfinance institutions from an economic and financial perspective. The results of this research will have implications for the policies of companies and financial institutions.