Kahihu Peter Karugu , Wachira David Muturi and Muathe Stephen Makau2024-05-092024-05-092021Kahihu P. K., Wachira D. M., and Muathe S. M. (2021): Managing market risk for financial performance: experience from micro finance institution in Kenya. Emerald Publishing Limitedhttps://repository.daystar.ac.ke/handle/123456789/4580Journal ArticlePurpose – The purpose of this study was to investigate on managing market risk and financial performance, experience from microfinance institutions (MFIs) in Kenya. Design/methodology/approach – This study used positivism philosophy and used explanatory nonexperimental research designs. The targeted population was all the 13 registered deposit-taking MFIs in Kenya and a census approach was used. The study used secondary data which was collected and analyzed from microfinance Institutions annual audited financial reports for the period between 2014 to 2018. This study was anchored on two theories, namely, resource-based value theory and extreme value theory. Findings – The results indicated that interest rate and financial leverage risk had a positive significant effect on the financial performance of MFIs in Kenya. Foreign exchange risk was found to have a negative significant effect on the financial performance of MFIs. However, inflation rate risk was found to have no significant effect on the financial performance of MFIs. Research limitations/implications – This study recommended that the chief executive officers of MFIs should use the mechanism of identifying market risk variables, especially Interest rate, financial leverage and foreign exchange risks to enable them to put the necessary measures to mitigate those risks and enhance the financial performance of MFIs in Kenya. Originality/value – This study is unique as it touches the microfinance industry which has a steady fast growth in assisting accessibility of financial services to small and medium enterprises. Most of the previous study concentrated on other industry in the financial sector.enKenyaForeign exchange riskFinancial performanceInterest rateInflation rateMarket riskFinancial leverage riskMicrofinance institutionsInterest rate riskInflation riskArticle