Moderation Effect of Interest Rates on the Nexus between Firm Characteristics and Financial Stability of Microfinance Banks in Kenya
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Date
2021-07-12
Authors
Kweyu, Robinson Changaya
Omagwa, Job
Abdul, Farida
Journal Title
Journal ISSN
Volume Title
Publisher
IOSR Journal of Economics and Finance (IOSR-JEF)
Abstract
Microfinance institutions provide financial services in small scale to the unbanked who are unable to receive
credit from the formal banking sector and as well as other standard financial systems. However, over the years,
the financial stability of microfinance banks in Kenya has attracted key consideration from policy makers. The
study sought to assess the moderating effect of interest rates on the relationship between firm characteristics
and financial stability of Microfinance Banks in Kenya. The study is guided by Financial Intermediation Theory.
The study targeted the 13 microfinance banks in Kenya, hence a census study. The study concluded that interest
rates had significant moderating effect (β=34.223, p=0.000) on the relationship between firm characteristics
and financial stability of Microfinance Banks in Kenya. The study also presented a workable empirical model on
firm characteristics, interest rates and financial stability as it statistically established significance on the nexus
between these variables. The study recommends that the setting of interest rates should be guided by the
underlying economic conditions of the country
Description
A Research Article in the IOSR Journal of Economics and Finance (IOSR-JEF)
Keywords
Interest Rates, Firm Characteristics, Financial Stability, Microfinance Banks
Citation
Robinson Changaya Kweyu, et. al. “Moderation Effect of Interest Rates on the Nexus between Firm Characteristics and Financial Stability of Microfinance Banks in Kenya.” IOSR Journal of Economics and Finance (IOSR-JEF), 12(4), 2021, pp. 52-28