FACTORS AFFECTING FINANCIAL PERFORMANCE OF DEPOSIT TAKING MICROFINANCE INSTITUTIONS IN NAIROBI COUNTY

Abstract

The purpose of this study was to examine the factors affecting Deposit Taking Microfinance Institutions’ financial performance in Nairobi County. Research was guided by the following research objectives: Does technological innovation affect microfinance institutions performance in Nairobi; Does accountability in leadership affect microfinance institutions performance in Nairobi; Does leadership structure affect microfinance institutions performance in Nairobi; Does capital structure affect microfinance institutions performance in Nairobi? The study adopted a quantitative research methodology and a descriptive design. The target population was 132 from which a sample of 132 was to be selected through a census method. A Likert scale type questionnaire was used to collect data from the subjects. This was distributed by the researcher to twelve DTMFIs within Nairobi County with an exclusion of one which requested not to be part of the study. A sample of 103 participants out of the 132 took part in the study. The findings revealed that technological innovation has significant (β=.192, while p = 0.018) relationship with financial performance of DTMFIs in Nairobi County. Further the findings revealed that leadership accountability has no significant (β= -.028, whereas p = .324) relationship with financial performance of DTMFIs in Nairobi County. In addition, the findings revealed that leadership styles has significant (β=.350, while p = 0.002) relationship with financial performance of DTMFIs in Nairobi County. Lastly the findings revealed that resource allocation has a significant (β=.344, while p = 0.002) relationship with financial performance of DTMFIs in Nairobi County