Saving and credit corporation finance institutions play a great role in supporting the economic activities of the rural and urban law income hold in developing countries.
Studies show that African MFIs are important actors in the financial sector, and they are well positioned to grow and reach the millions of potential clients who currently do not have access to mainstream financial services (Lafourcade et al., 2005).Ebisa et al. (2013) found that microfinance institutions are decisive way outs from the vicious circle of poverty particularly for the rural and urban poor, particularly in a country like Ethiopia where many people live barely below the absolute poverty line. The micro financing industry of Ethiopia is escalating in the face of the growing deep concerns for inflation and low interest rate in the microfinance industry affecting the financial health and viability of saving and credit corporation .Many studies which are conducted on saving and credit corporation also indicate that, the contribution of these institutions for poverty eradication is significant.
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But the institutions face many challenges that inhibit their contribution for the development of the country. Hurissa (2012) identified the challenges of microfinance institutions by conducting research on the selected MFIs in Addis Ababa city. But the conclusion of her research is limited to the selected MFIs in Addis Ababa. The situation can vary from one MFI to another. So it is difficult to use her conclusions for all microfinance institutions.Though the strengths of the saving and credit corporation currently has own weigh its weaknesses, there are still big challenges facing the saving and credit corporation (Ebisa et al., 2013). This study also concludes that the importance of MFIs is unquestionable.
They contribute a lot to support the Ethiopian poor who are out of the formal banking system. The challenges of the Ethiopian microfinance institution were identified at a country level in this research. The conclusions are also more general and do not show the case of MFIs in Hawassa city separately.According to Amha and Narayana (2000), the Ethiopian MFIs have many problems related with the regulatory framework in the saving and credit corporation , limited support to micro and small enterprise development, the activities of NGOs on providing credit as a grant, absence of solid linkages between saving and credit corporation and micro finance institution , lack of fund for loans and an institution to establish saving and credit corporation fund and access to soft loans from JBAS Vol.6 No. 1 June 2014 5 NGOs, very limited no research and innovation in the saving and credit corporation and other problems also identified on his research findings. But little researched was prepared in amhara region in gonder city The finding of this research was more general and the case of saving and credit corporation in gonder city was not indicated specifically in this research. In addition to this, the findings are outdated.
Within these more than ten year period, there may be many policy changes and the situation might be changed.By considering the gaps of different researches conducted on microfinance institutions, this study focused on filling this research gap by focusing on assessment of the factors which affect the profitability of selected saving and credit corporation in the study area, namely northe gonder in debark city , which are working in the settlement of north gonder zone and the center of smin national park that is the truism distention with the help of the following guiding basic research questions:1. What are the major factors which affect the profitability of saving and credit corporation?2. Do all saving and credit face similar problems which affect their profitability ?3.
What are the rationales behind the success and failure of profitability?4. What factors are related to clients of profitability?