Determinants of portfolio concentration risk in microfinance institutions in Kenya

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dc.contributor.authorTanyai, N. N.
dc.date.accessioned2023-07-25T08:04:51Z
dc.date.available2023-07-25T08:04:51Z
dc.date.issued2023
dc.descriptionFull- text thesis
dc.description.abstractMicrofinance institutions’ performance is important. Stable microfinance institutions advance commerce helping alleviate poverty and unemployment. Microfinance banks offer vital financial services that include savings, credit, insurance and financial advisory to low-income earners and small firms. However, MFIs are vulnerable to portfolio concentration risk which substantially affect their financial stability. Additionally, legal reforms have been instituted to offer sound regulatory framework for microfinance institutions in Kenya. Specifically, the study sought to examine the determinants of portfolio concentration risk among the microfinance institutions in Kenya and to investigate the moderating effect of 2019 legal reforms on determinants of portfolio concentration risk in microfinance institutions in Kenya. In terms of the determinants of portfolio concentration risk among the MFIs, the study covered firm level factors, industry-level factors, and macro-economic factors. This study was anchored on public interest theory of regulation and modern portfolio theory. The study adopted a positivism research philosophy and follow an explanatory research design. The study's target population was seventy senior credit officers drawn from the fourteen registered and licensed microfinance banks operating in Kenya. This study used primary data that was collected by the use of a semi-structured questionnaire. Data analysis was done in the form of descriptive and inferential statistics. Results showed that firm specific factors, industry level factors and macroeconomic factors had a positive effect on portfolio concentration risk. This meant that they did not lead to addressing portfolio concentration risk among MFIs, but rather exacerbated it. Moreover, it emerged that 2019 legal reforms moderating the relationship between firm specific factors, industry level factors and macroeconomic factor with portfolio concentration risk. It is recommended that MFIs adopt and practice the legal reforms as instituted as this lowers portfolio concentration risk.
dc.identifier.citationTanyai, N. N. (2023). Determinants of portfolio concentration risk in microfinance institutions in Kenya [Strathmore University]. http://hdl.handle.net/11071/13373
dc.identifier.urihttp://hdl.handle.net/11071/13373
dc.language.isoen
dc.publisherStrathmore University
dc.titleDeterminants of portfolio concentration risk in microfinance institutions in Kenya
dc.typeThesis
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MCOM Theses and Dissertations (2023)