Financial Accountability and Sustainability of Microfinance Institutions in West Pokot County, Kenya
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Date
2022
Authors
Linus, Lokira L
Wamugo, Lucy
Journal Title
Journal ISSN
Volume Title
Publisher
IJCAB publishing Group
Abstract
In the recent past, there has been a constant demand for timely accountability reports due to
increased awareness, devolution of funds and establishment of various new institutions. Financial
sustainability of microfinance institutions in West Pokot County in Kenya has been highlighted as
a major concern. The main purpose of the study was to determine the effects of financial
accountability on the sustainability of the microfinance institutions in the West Pokot County. The
specific objectives were to: determine the effect of audit efficiency on the sustainability of Micro
Finance Institutions (MFIs) in West Pokot County; establish the effect of fraud detection on the
sustainability of microfinance institutions in West Pokot County; determine the effect of financial
reporting on the sustainability of microfinance institutions in West Pokot County; and determine
the effect of financial regulation on the sustainability of microfinance institutions in West Pokot
County. The study was based on Agency theory, stakeholder theory, and stewardship theory. The
study applied explanatory research design. The target population was the 6 MFIs in West Pokot
County. A census was taken since the population is small. The researcher used a semi-structured
questionnaire administered to each member of the respondents to collect the data. The collected
data was analyzed using descriptive statistics and regression and correlation analysis by the help
of SPSS. The results were presented in tables, pie charts and bar charts. From the findings, when
financial accountability factors are held at zero, sustainability of microfinance institution will be
negative (-0.257). At the same time, an increase in audit efficiency, fraud detection, financial
reporting, and financial regulations each by one unit leads to an increase in sustainability of
microfinance institutions by 0.276, 0.313, 0.453, and 0.036 units respectively the p-values were
also less than 0.05 (that is 0.025 for audit efficiency, fraud detection (0.002), financial reporting
(0.005) and financial regulations (0.038). This implies that all financial accountability factors
considered in this study have a positive relationship with sustainability. The study concludes that
financial accountability is to a great extent observed in MFIs particularly through audit efficiency,
fraud detection, financial reporting, and financial regulations. The study recommends that the
government through the relevant agents should ensure existing financial accountability regulatory
framework is adhered to ensure sustainability of microfinance institutions. Microfinance
institutions also should ensure they pay focus on audit efficiency, fraud detection, financial
reporting, and financial regulations
Description
Article
Keywords
Audit, Financial accountability, Financial Reporting, Financial regulation, Fraud detection, Micro Finance Institution, Sustainability
Citation
Lokira, L., & Wamugo, L. (2022). Financial Accountability and Sustainability of Microfinance Institutions in West Pokot County, Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 4(2), 47-59.