Effect of Capital Structure on Financial Performance of Deposit-Taking Microfinance Banks in Nairobi City County, Kenya
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Date
2024-01
Authors
Onsase, Moffat Jeremiah
Irungu, Anthony Mugetha
Journal Title
Journal ISSN
Volume Title
Publisher
AJOEI
Abstract
Study Problem: Microfinance institutions play a vital role in bolstering economies by
facilitating increased financial flow. However, they also encounter challenges stemming from
government policies, economic fluctuations, and loan defaults. This study investigates the
impact of capital structure on the financial performance of deposit-taking microfinance banks
in Nairobi County, Kenya.
Purpose of the Study: The purpose of this study is to determine the effect of capital structure
on the financial performance of deposit-taking microfinance banks in Nairobi County, Kenya.
Methodology Used: The methodology used in this study is a descriptive research design. The
entire population of the 13 licensed microfinance banks in Nairobi County was considered, and
secondary data from various sources, including the Central Bank of Kenya and the Association
of Deposit-Taking Microfinance Banks in Kenya, was analyzed using SPSS.
Findings of the Study: The findings of this study are that equity capital has a significant
influence on the performance of deposit-taking microfinance banks.
Conclusion: The study concludes that robust capital structures and prudent equity management
are crucial for the efficient operation of microfinance institutions.
Recommendation: The recommendations of this study are to prioritize capital adequacy
planning, redirect efforts toward high-impact areas, and optimize debt management strategies
to enhance overall performance.
Description
Article
Keywords
Capital Structure, Financial Performance, Deposit-Taking, Microfinance Banks, Nairobi City County, Kenya
Citation
Onsase, M. J., & Irungu, A. M. (2024). EFFECT OF CAPITAL STRUCTURE ON FINANCIAL PERFORMANCE OF DEPOSIT-TAKING MICROFINANCE BANKS IN NAIROBI CITY COUNTY, KENYA. African Journal of Emerging Issues, 6(1), 75 - 84. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/531