The Effect of Stakeholder Accountability on the Financial Efficacy of Licensed Microfinance Institutions in Kenya

Abstract

This study sought to investigate the effect of stakeholder accountability on the financial efficacy of microfinance institutions in Kenya. The study was anchored in efficiency and institutional theories to provide a comprehensive understanding of the factors influencing financial efficacy. A population of 1792 respondents was targeted, out of which a sample size of 327 was drawn using the Yamane Formula. The proportional allocation method was applied to obtain the sample for each branch. Structured questionnaires were distributed physically in order to get the maximum number of respondents. A pilot study was conducted in Uasin Gishu County as a pre-test of the research instruments to confirm their validity and reliability. A correlational research design was used, and data were analysed using SPSS version 28. The findings revealed that stakeholder accountability (r=0.742, p=0.000) significantly influenced the financial efficacy of licensed microfinances in Kenya. As a result, the null hypothesis was rejected. The findings from this study would provide valuable insights into stakeholder accountability that can enhance the financial efficacy of microfinance institutions in Kenya.