Reliability, validity and multicollinearity
| Definition of construct | Source | Items codes and descriptions | Factors loading | (VIF) |
|---|---|---|---|---|
| Client-Business Performance (CBP): (Cronbach's Alpha = 0.779, CR = 0.871, AVE = 0.693) | ||||
| The borrowers' inability to improve sales, profits and overall business outcomes relative to competitors | Fatoki (2011) | CBP-1: Business performance of MFIs client term sale growth is not satisfactory | 0.843 | 1.75 |
| CBP-2: Business performance of MFIs client in terms of profit growth is poor | 0.833 | 1.749 | ||
| CBP-3: Overall business performance of MFIs client poor as compare their competitors | 0.822 | 1.459 | ||
| Loan Repayment Problems (LRP): (Cronbach's alpha = 0.866, CR = 0.904, AVE = 0.653) | ||||
| Loans pose risks when borrowers default on contractual repayment obligations, potentially causing financial losses to institutions | Worokinasih and Potipiroon (2019) | LRP-1: People faced problems in paying principal amount of loan | 0.825 | 2.189 |
| LRP-2: People faced problems in paying interest on their loan | 0.856 | 2.465 | ||
| LRP-3: People sale their personal assets to repay the loan | 0.821 | 2.104 | ||
| LRP-4: People borrower money from friends/relatives to repay the loan | 0.831 | 2.242 | ||
| LRP-5: People take loan to repay the existing loan | 0.698 | 1.377 | ||
| Malpractice in Credit Assessment (MPCA) (Cronbach's alpha = 0.842, CR = 0.888, AVE = 0.614) | ||||
| Poor credit assessment involves violating MFIs' or banks' policies during client evaluation for personal gain, such as commission or bribery | Amoako (2016) | MPCA-1: MFIs employees approved factious credit | 0.780 | 1.825 |
| MPCA-2: MFIs employees received commission (bribery) from MFIs clients | 0.842 | 2.835 | ||
| MPCA-3: MFIs employees make credit assessment based on nepotism | 0.808 | 2.625 | ||
| MPCA-4: MFIs employees forced lending to fulfill their credit disbursement targets | 0.735 | 2.096 | ||
| MPCA-5: MFIs employees involved in insider lending | 0.748 | 2.147 | ||
| Procedural Deficiencies (PD) (Cronbach's alpha = 0.779, CR = 0.875, AVE = 0.601) | ||||
| Incompetence or failure to fully adhere to and implement MFIs' or banks' lending policies in both letter and spirit | Kassim and Rahman (2018) | PD-1: MFIs employees used lax procedures in credit assessment | 0.744 | 1.351 |
| PD-2: MFIs employees used speedy consideration approach in granting loan | 0.794 | 1.673 | ||
| PD-3: MFIs employees do not used aggressive credit collection approach | 0.828 | 1.789 | ||
| PD-4: MFIs employees violate bank rules during credit assessment | 0.732 | 1.457 | ||
| Definition of construct | Source | Items codes and descriptions | Factors loading | (VIF) |
|---|---|---|---|---|
| The borrowers' inability to improve sales, profits and overall business outcomes relative to competitors | CBP-1: Business performance of MFIs client term sale growth is not satisfactory | 0.843 | 1.75 | |
| CBP-2: Business performance of MFIs client in terms of profit growth is poor | 0.833 | 1.749 | ||
| CBP-3: Overall business performance of MFIs client poor as compare their competitors | 0.822 | 1.459 | ||
| Loans pose risks when borrowers default on contractual repayment obligations, potentially causing financial losses to institutions | LRP-1: People faced problems in paying principal amount of loan | 0.825 | 2.189 | |
| LRP-2: People faced problems in paying interest on their loan | 0.856 | 2.465 | ||
| LRP-3: People sale their personal assets to repay the loan | 0.821 | 2.104 | ||
| LRP-4: People borrower money from friends/relatives to repay the loan | 0.831 | 2.242 | ||
| LRP-5: People take loan to repay the existing loan | 0.698 | 1.377 | ||
| Poor credit assessment involves violating MFIs' or banks' policies during client evaluation for personal gain, such as commission or bribery | MPCA-1: MFIs employees approved factious credit | 0.780 | 1.825 | |
| MPCA-2: MFIs employees received commission (bribery) from MFIs clients | 0.842 | 2.835 | ||
| MPCA-3: MFIs employees make credit assessment based on nepotism | 0.808 | 2.625 | ||
| MPCA-4: MFIs employees forced lending to fulfill their credit disbursement targets | 0.735 | 2.096 | ||
| MPCA-5: MFIs employees involved in insider lending | 0.748 | 2.147 | ||
| Incompetence or failure to fully adhere to and implement MFIs' or banks' lending policies in both letter and spirit | PD-1: MFIs employees used lax procedures in credit assessment | 0.744 | 1.351 | |
| PD-2: MFIs employees used speedy consideration approach in granting loan | 0.794 | 1.673 | ||
| PD-3: MFIs employees do not used aggressive credit collection approach | 0.828 | 1.789 | ||
| PD-4: MFIs employees violate bank rules during credit assessment | 0.732 | 1.457 | ||
Note(s): CR = Composite Reliability; AVE = Average Variance Extracted; VIF = Variance Inflation Factor