Debtors Management Practices and Financial Performance of Registered Microfinance Institutions in Nandi County, Kenya
| dc.contributor.author | Korir,Beatrice | |
| dc.date.accessioned | 2024-08-05T12:55:11Z | |
| dc.date.available | 2024-08-05T12:55:11Z | |
| dc.date.issued | 2024-06 | |
| dc.description | A Research project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the degree of Master of Business Administration (Finance option) of Kenyatta1university. May, 2024 Supervisor Job Omagwa | |
| dc.description.abstract | Microfinance institutions in Kenya play a significant role since Kenya is one of the most densely populated countries, however in terms of financial performance of these institutions, it’s still lagging behind. However, debtor’s management challenges continue to hinder achievement of objectives and have led to poor performance in the recent past. Sound debt management system is a prerequisite for a financial institution’s stability and continued profitability, while deteriorating credit quality is the most frequent cause of poor financial performance and condition. The probability of bad debts increases as debt standards are relaxed. Microfinance institutions must therefore ensure that the management of receivables is efficient and effective. The study looked into effect of debt management practices and financial performance of microfinance institutions. The study was guided by the following specific objectives: To determine the effect of debt collection policy, to examine the effect of client appraisal to establish the effect of debt control and to determine the effect of terms of credit on financial performance of selected microfinance institutions in Nandi County, Kenya. The Five C's theory, Modern Portfolio Theory, and Transaction Costs Theory served as the study's foundations. A descriptive1research technique was applied in1this study. The study's target group consisted of 101 personnel from the finance and credit departments of 11 microfinance banks licensed with the1Central Bank1of Kenya (CBK) in Nandi County. Due to the manageable size of the study's population, the1respondents were chosen by purposeful sampling, employing a census approach. Questionnaires were used to collect data from the respondents. The1collected data1was analyzed1using SPSS version 25. From the analysis data indicate a direct relationship between the debt collection policy and the financial performance of microfinance institutions this was supported by a correlation coefficient of 0.357 and a p value of 0.010. The results indicate a substantial and positive link (correlation coefficient = 0.223, p-value = 0.015) between client appraisals and financial performance of microfinance firms in Nandi County. The result indicated1a strong and1statistically significant relationship1between debt monitoring and management on performance1of microfinance1institutions by a correlation1coefficient of 0.265 and a p-value of 0.030. The study findings indicate a strong and statistically significant1relationship between terms of loan and the1financial performance1of microfinance institutions by a correlation coefficient of 0.221 and a p-value of 0.0320. The study achieved an R-Squared value of 0.789, indicating that credit terms, debt control, customer evaluation, and debt collection policies account for 78.0% of the variation in the financial1performance of microfinance1institutions in Nandi County. The1study recommends that1microfinance1institutions should perform a comprehensive examination of transaction costs related to micro-financial activities. Contemplate the use of promotional efforts or incentives in order to appeal to a wider range of customers. The researcher recommends to policy maker to develop and enforce strong debt collection regulations for microfinance institutions in Nandi County. Offer clear instructions and assistance to ensure that these policies are successful in improving financial performance. The study recommends that a further study should be conducted on debtor's management approaches, which might have varying effects on financial success. Key determinants impacting the financial performance of the MFIS, such as credit evaluation, might also be investigated. Additionally, a comprehensive examination of debtor's management in Sacco's is another crucial aspect that necessitates careful scrutiny. | |
| dc.description.sponsorship | Kenyatta University | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/28595 | |
| dc.language.iso | en | |
| dc.publisher | Kenyatta University | |
| dc.title | Debtors Management Practices and Financial Performance of Registered Microfinance Institutions in Nandi County, Kenya | |
| dc.type | Thesis |