Browsing by Author "Ogaro, Peter Ondieki"

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    Internal Control Systems and Financial Performance of Microfinance Institutions in Laikipia County – Kenya
    (IJARKE Business & Management Journal, 2024-10-24) Ogaro, Peter Ondieki; Mungai, John
    Most microfinance institutions have pulled out of the industry altogether because of how much money has been lost in Kenya's microfinance sector. Return on equity has grown negatively due to low profitability and losses. From the 2015–2016 fiscal years to the 2022–2023 fiscal years, client deposits declined. After rising in December 2016, the capital base was hit hard by the growth of nonperforming loans. As a result, liquidity levels will fall in 2019, 2020, 2021, and 2022. This research set out to address that question by analyzing microfinance institutions in Laikipia County, Kenya, with an eye on their internal control mechanisms and their impact on their efficiency. The goals of the research were to analyze the financial performance of microfinance institutions in Laikipia County, Kenya, and how the control environment affected that performance. The research was based on systems theory. Questionnaires and a descriptive research approach were used to collect primary data. Five MFIs operating in Laikipia County were the focus of the research: KWFT, Faulu Ltd., Asa Ltd., SMEP, and PAWDEP Ltd. A total of 289 individuals were surveyed, with 168 chosen at random from the pool of potential respondents. Both descriptive and inferential statistics were used to examine the quantitative data. Data was shown quantitatively using graphs, tables, and frequency tables. Based on the findings, MFIs' control chains are ineffective because of their lack of progress in corporate structure. On the other hand, all of the company's core functions are regulated by established policies and procedures. The results showed that the staff performed well in carrying out the financial management tasks, with the periodic accounts reconciliation being the only stumbling block. To aid in the assessment, reduction, and tracking of risks, the MFIs have devised individualized approaches to risk management. The research found that MFIs' financial performance in Laikipia County, Kenya, was positively and significantly impacted by control environment. The study suggested that microfinance institutions (MFIs) broaden the scope of their control measures to include both the degree of compliance and the control activities involved in authorizing transactions