Microfinance in Africa: Interest Rate, Financial Leverage, and Financial Performance: Experience and Lessons in Kenya
Loading...
Date
2021-06
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Applied Economics and Business
Abstract
The purpose of the study was to investigate microfinance in Africa, the interplay of interest rate, financial leverage and financial performance, experiences, and lessons from microfinance institutions in Kenya. The study employed positivism philosophy as the research philosophy and used explanatory research designs. The targeted population was all the thirteen registered Deposit Taking microfinance institutions in Kenya. The sampling method that was used was the census approach and used secondary data from MFI’s (Microfinance Institutions) published accounts for the period between 2014-2018. The study was anchored on 3 theories: Resource-Based theory, Dynamic Capability Theory, and International Fisher Effect theories. Various diagnostic tests were applied to ensure we had a suitable empirical model. Data analysis was carried out using both descriptive and inferential statistics using panel data multiple regression analysis. The study results indicated that interest rates and financial leverage have a positive effect on the financial performance of microfinance institutions. The MFIs owners and managers should put in place risk management measures such as risk identifications to prevent the MFIs from the effect of interest rate and financial leverage as they affect their financial performance.
Description
Journal Article
Keywords
Financial performance, Financial leverage, Interest rate, Kenya, Microfinance institutions
Citation
Karugu K. P., Muturi W. D., and Muathe S. M. A. (2021): Microfinance in Africa: Interest Rate, Financial Leverage, and Financial Performance: Experience and Lessons. Journal of Applied Economics and Businessn Kenya.