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Determinants of financial performance of microfinance insitutions in Kenya: A camel approach

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dc.contributor.author Omondi, Humphrey Odanga
dc.date.accessioned 2020-11-26T09:36:59Z
dc.date.available 2020-11-26T09:36:59Z
dc.date.issued 2020
dc.identifier.uri http://ir.mu.ac.ke:8080/jspui/handle/123456789/3694
dc.description.abstract Microfinance Institutions (MFI) objectivity is to operate profitably so as to maintain its stability, growth prospects and sustainability. Microfinanceinstitutions are faced with a number of challenges in achieving this goal which includes; Liquidity, capitalization and poor management. Guided by the stakeholder’s theory; this study examined the determinants of financial performance of MFIs Kenya.The objectives of the study were to determine the effect of Capital Adequacy, Asset Quality, Management Efficiency, Liquidity and Net Interest Margin on the financial performance of MFIs in Kenya. The study adopted an explanatory research design using panel data.Microfinance institutions financial statements and bank supervision reports from the Central Bank of Kenya were used to capture data of the study variables.All Microfinance institutions operating in Kenya for eight years between the year 2011 and 2018 were covered.Descriptive statistics and inferential statisticswere done to establish the relationship between the study variables.Arandom effect estimation established that capital adequacy has a negative insignificant effect (ß = - 0.003 ; Sig = 0.928);asset quality has a negative insignificant effect (ß = - 0.071 ; Sig = 0.197); management efficiency had a negative and significant effect (ß = - 0.032; Sig = 0.000); net interest margin had a negative insignificant effect (ß = - 0.195; Sig = 0.167) liquidity had a positive insignificant effect (ß = 0.020 ; Sig = 0.792) on financial performance of MFIs respectively.Based on the study findings, the study concluded that Capital Adequacy, Asset Quality, Net Interest Marginhad insignificant negative effect on financial performance of MFI except Management Efficiency which had a negative significant effect on the performance of MFIs. The study recommends that MFIs should adopt efficient systems to improve their capital adequacy, asset quality, management efficiency, net interest margin and liquidity. Further studies can be done to establish the other factors not investigated in the study but explain the remaining 19.8% of the variation in performance of MFIs in Kenya. These factors can be non-bank-specific factors such as the economy indicators, social environment of operation and political environment of operation. en_US
dc.language.iso en en_US
dc.publisher Moi University en_US
dc.subject FInancial performance en_US
dc.subject Microfinance institutions en_US
dc.title Determinants of financial performance of microfinance insitutions in Kenya: A camel approach en_US
dc.type Thesis en_US


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