THE ROLE OF MICRO FINANCE INSTITUTIONS IN THE KENYAN ECONOMY: A CASE OF KISII TOWN, NYANZA
Apalia Ekakoron Anthony - Egerton University, Kenya
ABSTRACT
The objective of the study was to determine the role of micro fiancé institutions in the Kenyan Economy- a case of Kisii, Nyanza. The research used a survey method to assist the researcher achieve the objective of the study. The population of the study comprised of all operational Micro Finance Institutions registered in Kisii, Kenya. Convenient sampling technique was used to select the sample. The study also used, secondary data that was obtained from the financial statements of individual MFIs in Kisii. The results showed that profit before tax depended mainly on interest income, interest expense, shareholders funds, loans and advances to customers. Other significant determinants on profitability of microfinance institutions include provision for bad and doubtful debts and deposits & balances due from other financial institutions. The measures that were considered very important in determination of financial performance by the participants included operational costs, debt equity portfolio at risk and labour productivity. Financing costs was reported to be a major proportion of cost in the organization. The factors that were rated as highly significant by the respondents in determining financial sustainability include: repayment, average loan size, saving deposits and operational costs. Loan size, average size of saving deposits and number of branches were rated moderately significant in determination of financial stability which resulted to economic growth.