Browsing by Author "Koori,Jeremiah"

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    Credit Insurance and Quality of Loan Portfolio of Microfinance Banks in Kenya
    (Stratford Peer Reviewed Journals and Book Publishing, 2026-01-02) Muindi, Cellinah Wanza; Koori,Jeremiah; Irungu, Anthony Mugetha
    The microfinance sector in Kenya has been grappling with deteriorating loan portfolio quality, as evidenced by the 5.55 percent net non-performing loans ratio between 2019 and 2022, exceeding the International Monetary Fund and World Bank's 5 percent vulnerability threshold. The absolute value of non-performing loans escalated from KES 4.198 billion in 2019 to KES 5.718 billion in 2022, creating a critical contradiction where expanded insurance coverage coincided with worsening portfolio performance. Therefore, this study assessed the effect of credit insurance on loan portfolio quality in Kenya's microfinance banks. The research was grounded in risk management theory. The study employed a positivism research philosophy and descriptive research design, targeting all 14 Central Bank of Kenya-regulated microfinance banks. Secondary data spanning 2019-2023 was analyzed using STATA through descriptive and inferential panel regression techniques. Credit insurance was measured as the ratio of insured loan amounts to total loans issued, while portfolio quality was measured as non-performing loans to total loans ratio. The study found that credit insurance has a statistically significant and negative effect on loan portfolio quality in Kenya’s microfinance banks. The results show that each unit increase in credit insurance is associated with a 0.266-unit decline in loan portfolio quality (β = −0.266, p = 0.000), confirming the rejection of the null hypothesis. This indicates that, rather than strengthening portfolio performance, increased reliance on credit insurance may undermine loan quality within the microfinance sector. The study recommends that regulatory bodies, specifically the Central Bank of Kenya, enforce stricter oversight frameworks for credit insurance implementation in microfinance banks to mitigate identified moral hazard effects. Regulations should mandate complementary monitoring systems that maintain rigorous credit appraisal standards and borrower screening processes even when insurance coverage exists, preventing insurance presence from encouraging lax lending practices. Microfinance institutions should integrate enhanced loan supervision mechanisms alongside insurance adoption, including periodic portfolio reviews, borrower repayment behavior monitoring, and insurance claim pattern analysis to detect early warning signals of moral hazard
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    Credit Management Practices and Bad Debt Levels of Microfinance Institutions in Nairobi City County, Kenya
    (Stratford, 2025-02) Choda,Linus James Odongo; Koori,Jeremiah; Makori,Daniel
    Between the years 2018 to 2021, the bad debt levels of MFIs in Nairobi City County, Kenya have been increasing by 18% annually. The increasing bad debt levels have negatively affected MFIs’ operations and their profits to the extent of some being declared bankrupt. The general objective of the study is to establish the effect of credit management practices on bad debt levels of microfinance institutions in Nairobi City County, Kenya. The specific objectives of the study include to evaluate the effect of credit risk identification on bad debt levels of microfinance institutions in Nairobi City County, Kenya, to assess the effect of credit risk monitoring on bad debt levels of microfinance institutions in Nairobi City County, Kenya, to assess the effect of collection policies on the bad debt levels of microfinance institutions in Kenya, to establish the effects of credit appraisal policies on the bad debt levels of microfinance institutions in Nairobi City County, Kenya, and to determine the effect of CBK regulations on bad debt levels of microfinance institutions in Nairobi City County, Kenya. The theories underpinning this study include; modern portfolio theory (MPT), capital asset pricing model (CAPM), credit risk theory and PRISM model of credit risk management. The study employed a descriptive research design, targeting 54 active microfinance institutions in Nairobi City County, Kenya, with a sample size of 15 selected through stratified random sampling. Primary data (credit management practices) and secondary data (bad debt levels) were collected using data collection sheets and questionnaires. These were administered to credit managers, finance analysts, accountants, and debt portfolio assistants via the drop and pick technique. Data was analyzed using SPSS version 29, incorporating descriptive statistics, diagnostic tests (normality, multicollinearity, heteroscedasticity, Hausman test), correlation analysis, regression analysis, and hypothesis testing. The study found that despite implementing credit management practices, microfinance institutions struggled to curb rising bad debt levels due to lenient loan issuance and collection policies. It concluded that instant loans, straightforward application processes, and weak credit monitoring have contributed to high default rates. The study recommends that microfinance institutions adopt AI and big data analytics for improved credit management and establish a shared credit identification system to reduce multiple borrowing and defaults.