Gitagia, FrancisImaana Kimathi Andrew2025-11-042025-11-042024Kimathi, I. K. A., & Gitagia, F. (2024). Analyzing CAMELS financial indicators and the performance of microfinance banks in Kenya. International Journals of Academics & Research (IJARKE) Business & Management Journal. https://doi.org/10.32898/ibmj.01/6.4article182617-4138https://ir-library.ku.ac.ke/handle/123456789/31915Research ArticleMicrofinance institutions in Kenya play a crucial role in the economy, contributing 18% to the GDP and employing 20% of the population. However, the Return on Assets (RoA) for these institutions has declined from 3.5% in 2018 to 1.5% in 2022. This study aimed to analyze the impact of selected CAMELS financial indicators on the financial performance of Kenyan microfinance banks, specifically examining capital adequacy, asset quality, management efficiency, earnings ability, and liquidity. It also explored the moderating role of market concentration on these relationships. The study, grounded in several financial theories, targeted 14 microfinance banks and utilized descriptive research design and comprehensive data analysis through SPSS. The results, derived from Feasible Generalized Least Square (FGLS) regression, indicated that capital adequacy, asset quality, and management efficiency positively influence financial performance, whereas earnings ability has a negative impact. The study emphasizes the need for improved credit risk assessment, staff training, profitability, and liquidity management to enhance financial performance. Ethical guidelines were strictly followed throughout the research, ensuring integrity and reliability of the findings.enArticle