EFFECT OF TECHNOLOGICAL INNOVATION ON FINANCIAL PERFORMANCE OF MICROFINANCE INSTITUTIONS IN KISII CENTRAL SUB-COUNTY KISII COUNTY, KENYA

Abel Kyana Mainga, Dr. Kennedy Nyariki

Abstract


Many Rural Credit Schemes have sustained heavy losses because of poor Loan collection delinquency/default and yet a lot more have been dependent on Government subsidy to financially cover the losses they faced through delinquency/default. A delinquent loan becomes a defaulted Loan when the chance of recovery becomes minimal. The main objective of this study is the assessment of loan default determinants on financial performance of microfinance institutions in Kisii Central Sub-County. It’s worth noting that micro-finance institutions are of two categories; formal and informal. Formal are those Microfinance Institutions which are registered as under the legal and regulatory frameworks while the informal Microfinance Institutions are unregistered and operate like shylocks. This study concentrated on the formal Microfinance Institutions in Kisii Central Sub-County. Specific objective was to assess how technological innovation determines the performance of MFIs in Kisii Cental Sub- County. The target population comprised a total of one hundred and twenty loan borrowers, one hundred Microfinance Institutions officers and twenty-five micro-finance institutions out of which a sample of twelve were picked using simple random sampling for each stratum which enabled every member of the population have an equal and independent chance of being selected as respondent and also, simplest most convenient and bias free selection method.  The study adopted 25% sample size of the target population, in total, a sample of 220 members were drawn from 880 members. The data was collected by use of structured and semi-structured questionnaire. The study adopted a descriptive correlation research design. The data was analyzed using descriptive and inferential statistics. The descriptive statistical analysis included frequencies, mean and standard deviation while the inferential statistics analysis included Pearson correlation and regression analysis. The study found a statistically significant strong positive correlation between technological innovation and the financial performance of the Microfinance Institutions. The study recommended proper, improved and thorough screening of borrowers and Microfinance Institutions staff.

Keywords: Technological Innovation, Financial Performance, Microfinance Institutions


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References


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