Mobile Banking and Financial Performance of Microfinance Banks in Nairobi City County, Kenya
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Date
2024-03
Authors
Kipchoge, Edwin Kibet
Mutuku, Morrison
Journal Title
Journal ISSN
Volume Title
Publisher
IRJP
Abstract
Microfinance banks play an essential role in poverty reduction and economic development as
they enhance financial inclusion. To reduce the cost of service delivery and improve efficiency
in service delivery, microfinance banks in Kenya have adopted mobile payments. Despite
adoption of mobile banking as among microfinance institutions in Kenya, their performance has
been fluctuating over the years. Therefore, this study examined influence of mobile banking on
microfinance institutions’ financial performance in Kenya. The study utilized an explanatory
research design. The target population was 13 microfinance banks operating in Kenya and
covered a period of 10 years (2012 to 2021). Since the sample size of the research was small, a
census approach was employed. Secondary data on mobile banking and financial performance
(ROA) was gathered from the Central Bank of Kenya and from microfinance banks’ financial
statements in Kenya. Secondary data was gathered using data extraction checklist. Secondary
data in this study was quantitative (continuous data). Quantitative data was also edited and then
coded and keyed into STATA version 14 for purposes of analysis. Panel data analysis techniques
were used in data analysis. Specifically, inferential and descriptive statistics were employed in
quantitative data analysis. Descriptive statistics utilized included frequency distributions,
percentages, standard deviation and mean. Diagnostic tests included autocorrelation test,
normality test, heteroscedasticity test, linear test, nit root test and Hausman test. Regression
analysis was utilized to examine the effect of independent variable on the dependent variable. The
study found that mobile banking has a positive and significant relationship on financial
performance of microfinance banks in Kenya. The study recommends that microfinance banks in
Kenya should consider expanding their mobile banking services to reach a broader customer
base. This could involve developing user-friendly mobile apps, SMS-based services, or other
mobile banking channels to make it easier for customers to access their accounts and conduct
transactions.
Description
Article
Keywords
Mobile Banking, Microfinance Banks, Financial Performance
Citation
Kipchoge, E. K., & Mutuku, M. (2024). MOBILE BANKING AND FINANCIAL PERFORMANCE OF MICROFINANCE BANKS IN NAIROBI CITY COUNTY, KENYA. International Research Journal of Economics and Finance, 6(1).