Risk Management Practices and Financial Performance of Licenced Microfinance institutions in Kenya

Abstract

The aim of this study was to investigate the influence of credit risk management practices on financial performance of MFIs in Kenya. The target population was 136 senior and middle level management staff of 14 registered MFIs in Kenya; from where Yamame’s sampling formula was applied to get a sample size of 126 respondents who were selected using simple random sampling. Data was collected using structured questionnaires and computed using SPSS; where descriptive and inferential statistics were generated. A total of 112 out of 126 respondents completely filled online questionnaires depicting a response rate of 88.9% which is good for generalizability of research findings to a wider population. The study concluded that credit risk management practices significantly influence the financial performance of Microfinance in Kenya. The study recommended that managers of MFIs Organizations should provide regular training for credit officers and financial managers to improve their competency in identifying, assessing, and mitigating credit risks.