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dc.contributor.advisorFestus Mithien_US
dc.contributor.authorBoye, Hussein Rob
dc.date.accessioned2023-08-14T13:30:21Z
dc.date.available2023-08-14T13:30:21Z
dc.date.issued2023
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/26840
dc.descriptionA Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Business Administration (Finance), Kenyatta University, June 2023.en_US
dc.description.abstractMicrofinance banks in Kenya have continued to experience challenges of loan defaults which negatively impact their asset quality and performance. As a result of loan default, many of these institutions have suffered significant losses. The goal of this study was to see how firm factors affect non-performing loans at Kenyan microfinance institutions. One of the specific goals was to examine the effect of leverage, business size, liquidity, and capital sufficiency on nonperforming loans. Institutional theory, credit crunch theory, and liquidity preference theory inform the study. The research design was descriptive. The study's intended audience consisted of 13 Kenyan microfinance institutions. Secondary data was gathered for six years, from 2016 to 2021. The information was gathered from the respective microfinance institutions' annual records as well as the Kenyan Central Bank. Diagnostic tests including normality, multicollinearity, heteroskedasticity, autocorrelation, and Hausman tests were conducted. The analysis was premised on descriptive and inferential analyses. Descriptive analysis was undertaken first to give general research variables characteristics. These range from minimum, maximum values, standard deviation and mean. Correlation analysis was conducted to ascertain the direction as well as the extent of association among the research variables. Multiple regression model was used to establish the effect of firm characteristics on non-performing loans in Kenyan microfinance banks. The researcher acknowledged all sources from where information used was borrowed. The researcher sought approval letters from relevant authorities before undertaking data collection. The findings showed that leverage significantly and favorably affected non-performing loans. Non-performing loans were negatively and significantly affected by firm size. Microfinance banks' non-performing loans were not significantly affected by liquidity or capital adequacy. The study's conclusions suggest that lowering the debt ratio of microfinance banks will undoubtedly lead to a reduction in nonperforming loans. By expanding the asset base, there is a greater chance that the non-performing loans of the microfinance banks will be reduced. Increasing liquidity and capital adequacy would not have a substantial effect on the non-performing loans of the microfinance banks. The management of the microfinance banks should review the debt policies with aim of reducing over reliance on debts, should strengthen the equity policy that will lead to low leverage, should develop strategic plans aimed at strengthening and growing the asset base. The management should particularly channel most of the payoffs from investment in asset acquisition. The policymakers in the financial sector especially central bank of Kenya should streamlining policy implementation toward loan defaulters. Academicians and researchers should review the empirical findings of this study in building their research work on related topics.en_US
dc.description.sponsorshipKenyatta Universityen_US
dc.language.isoenen_US
dc.publisherKenyatta Universityen_US
dc.subjectFirm Characteristicsen_US
dc.subjectNon-Performing Loansen_US
dc.subjectMicrofinance Banksen_US
dc.subjectKenyaen_US
dc.titleFirm Characteristics and Non-Performing Loans of Microfinance Banks in Kenyaen_US
dc.typeThesisen_US


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