Determinants of Operational Sustainability of Micro Finance Institutions in Nairobi County, Kenya.
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Date
2013-08-26
Authors
Agumba, Joseph Agutu
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Abstract
Many people in developing countries have been given access to formal financial services through
microfinance programs. Nevertheless, millions of potential clients still remain un-served and the
demand for financial services far exceeds the currently available supply. Given significant
capital constraints, expansion of microfinance programs remains a formidable challenge facing
the microfinance industry. Moreover, it is observed that microfinance organizations have had
various degrees of sustainability. 'one such sustainability is the financial sustainability. Financial
sustainability has been defined by various researchers differently. As such there is no clear cut
definition of the word financial sustainability. The main objective of the study is to establish the
operational sustainability of micro finance institutions in Kenya. The study also investigated into
factors which affect the operations ..self- sufficiency and financial sustainability. The descriptive
survey study design was used to describe the relationships that exist between the independent
and dependent variables, (Kothari, 2003). The study utilized the primary and secondary data. For
the primary data, the respondents for the structured questionnaire was the MFIs finance
managers, marketing managers, human resource managers and chief legal advisers of the
institutions concerned. The secondary -data for the study was drawn from a data base of audited
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financial statements of MFIs in Kenya. The target population was 47 micro finance institutions
(MFIs) listed from Nairobi Securities Exchange (NSE) in Kenya and those obtained from the
MFIs which are not listed in the NSE which provide financial services to low income people in
Kenya. Data analysis was done using the SPSS program. Linear Regression analysis was carried
out to investigate into factors which affect the operations self- sufficiency and financial
sustainability as indicate below.
A multiple regression equation can be expressed as:
Y = ci + PI Xlit + P2 X2it + p3 X3it + P4 X4it + p5 X5it + p6 X6it + P7 X7it+P8X8it +Ei-------
Description
HG 178.33 .K4A33