Microcredit Risk Management Strategies and Loan Portfolio Quality of Microfinance Institutions in Kenya
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Date
2023-12
Authors
Muindi, Cellinah Wanza
Ambrose, Jagongo
Journal Title
Journal ISSN
Volume Title
Publisher
EdinBurg
Abstract
The study investigated the effects of Microcredit risk strategies on the loan portfolio quality of
microfinance institutions in Kenya. The analysis is based on a panel dataset of 14 microfinance
institutions in the period 2017 to 2021. The study was guided by the following theories the
institutional theory, the theory of information asymmetry, the theory of delegated monitoring
and the modern portfolio. The study will be useful to the MFIs managers and will help them
devise good policies to ensure borrowers are well screened to improve portfolio quality while
improving the cases of loan defaults. The study adopted a desktop methodology. Desk research
refers to secondary data that which can be collected without fieldwork. The quality of loan
portfolio has been affected most by nonperforming loans and has affected largely the
microfinance institution’s profitability and their financial performances, there have not been
adequately featured in any of the studies reviewed. To the academicians and researchers, they
will be furnished with relevant information regarding microcredit risk management and loan
portfolio quality of the Microfinance institutions in Kenya. This will also contribute to the
general body of banking sector and form a basis for further research. The regulators of Bank
Sector will use it to formulate stringent policies to tame the rising cases of non-performing
loans, evaluating how successive their approach has been identifying the gaps and adjust.
Description
Article
Keywords
Non-Performing Loan, loan portfolio quality, microcredit risk strategies, Microfinance institutions
Citation
Muindi , C. W. ., & Ambrose, J. . (2023). Microcredit Risk Management Strategies and Loan Portfolio Quality of Microfinance Institutions in Kenya. Journal of Finance and Accounting, 3(4), 32–42. Retrieved from https://edinburgjournals.org/journals/index.php/journal-of-finance-and-accountin/article/view/232