Kipchoge,Edwin Kibet2024-09-022024-09-022024-06https://ir-library.ku.ac.ke/handle/123456789/28706A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of the Degree of Master of Business Administration (Management Information System) of Kenyatta University. June 2024 supervisor. Morrisson Mutuku,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 digital inclusion services like internet banking, agency banking, and mobile payments. Despite adoption of digital inclusion among microfinance institutions in Kenya, in terms of mobile0banking, agency0banking, and internet0banking, their performance has been fluctuating over the years. Therefore, this study examined influence of digital inclusion and microfinance institutions’ financial performance in Kenya. The research’s primary objectives were to determine the effect0of0mobile0banking, agency0banking and internet0banking on financial0performance of microfinance institutions in Kenya. Moreover, the research utilized an explanatory research method. The population of the research was 13 banks of microfinance operating in Kenya and covered period of 10 years (2012 to 2021). Since the sample size of the research is small, a census approach was employed. Secondary information on mobile banking, agency banking, internet banking and financial0performance (ROA) was gathered from CBK 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. Moreover, inferential0and0descriptive0statistics were employed in quantitative data analysis. Moreover, descriptive statistics utilized frequency distributions, percentages, standard0deviation and mean. Diagnostic tests encompassed normality0test, heteroscedasticity0test, autocorrelation, linearity0test, stationarity and0unit0root0test and co-integration0test. Multivariate regression analysis was utilized to examine the effect0of independent0variable0on dependent0variable. The study0found0that mobile banking has a positive and significant relationship on financial performance of microfinance banks in Kenya. The study0also0found that agency banking has a significant and positive effect on the financial performance of microfinance banks in Kenya. However, the study established that internet banking has an insignificant and positive effect on0the0financial0performance 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. In addition, microfinance banks in Kenya should actively expand their network of agency banking partners. They should also seek out potential agents, such as small businesses, shops, or individuals, in underserved areas to increase accessibility to banking services. They should also should provide comprehensive training to agency banking partners to ensure they understand the services they are offering, as well as the regulatory and security requirements.enThesis