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dc.contributor.advisorJob Omagwaen_US
dc.contributor.authorLuvanda, Jackline
dc.date.accessioned2023-08-07T08:44:34Z
dc.date.available2023-08-07T08:44:34Z
dc.date.issued2023
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/26573
dc.descriptionA Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration (Finance) of Kenyatta Universityen_US
dc.description.abstractProfitability of most microfinance banks in Kenya has been erratic; these banks have been reporting losses for some years based on Central Bank of Kenya reports. These losses have put their sustainability at risk given the fundamental role they have in the economy, notably, giving financial services to the economically constrained. According to CBK studies, majority of microfinance banks have poor profitability and record losses. This making of losses places the sustainability of these microfinance banks at risk considering how important they are to the economy by giving financial services. Research on the connection between financial innovations and microfinance banks' profitability is still needed, particularly in Kenya where there is a dearth of empirical data. Extensive literature has reported financial innovation as a turnaround approach that can be used to increase profitability. The overall objective of the study was to ascertain how financial innovation affects microfinance bank’s profitability in Nairobi City County, Kenya. The specific objectives of the study were to identify the effects of institutional, marketing, institutional, product, and service innovation on the profitability of microfinance banks in Nairobi City County, Kenya, as well as the moderating role of firm size in the correlation between financial innovations and microfinance bank profitability in Nairobi City County, Kenya. The Schumpeter theory of innovation, the diffusion theory of innovations, the technological adoption model, and the agency theory all serve as foundations for this study. Explanatory research design was adopted. The target population included thirteen microfinance institutions in Nairobi City County, Kenya. The respondents were managers from the departments of human resources, finance, marketing, and information technology. 13 microfinance institutions in Nairobi City County, Kenya, served as the study's analytical unit. Using targeted sampling, the study chose 104 managers as its sample. For the project, both primary and secondary data were gathered. While secondary data was gathered using data extraction methods, primary data was gathered utilizing semi-structured questionnaires. Descriptive statistics and multiple linear regression analysis were used to analyze the data. The findings indicated that product innovation (β = 0.129, p <.05), service innovation (β = 0.392, p <.05), institutional innovation (β = 0.303, p <.05), and marketing innovations (β = 0.267, p <.05) had a positive and significant effect on microfinance bank profitability in Nairobi City County, Kenya. Further, firm size had a significant positive moderating effect on the relationship between financial innovations and profitability of microfinance banks (p<.05). According to the study's findings, financial innovations, such as those in product, service, institutional and marketing, significantly affects the profitability of microfinance banks in Nairobi City County, Kenya. The study also found that the profitability of microfinance banks in Nairobi City County, Kenya, benefited from financial innovations in large part as a result of company size. The study recommended the need for microfinance banks’ management to enhance product improvement, electronic fund transfer, quality products and differentiation of goods. The management should also enhance automation of service delivery, mobile phone subscriptions and enhancement of process design. Further, the management should focus enhance adoption of advanced technologies, supervisory framework for monitoring, and establishing partnerships. Additionally, the management should focus on enhancing market segmentation, branding of the products, and development of marketing teams. Finally, the management should focus on growing the organizations’ assets.en_US
dc.description.sponsorshipkenyatta universityen_US
dc.language.isoenen_US
dc.publisherkenyatta universityen_US
dc.subjectFinancial Innovationsen_US
dc.subjectMicrofinance Banksen_US
dc.subjectNairobi City Countyen_US
dc.subjectKenyaen_US
dc.titleFinancial Innovations and Profitability of Microfinance Banks in Nairobi City County, Kenyaen_US
dc.typeThesisen_US


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