Factors That Determine Financial Performance of Micro-finance Institutions

Abstract

It‟s a catch 22 position when managements are puzzled by what to do to enhance the sustainability of MFIs financially irrespective of being either Welfarists or Instututionists in order to continue serving the interest of their clients. The study adopted the descriptive research methodology in examining the factors that determine financial performance of MFIs in Nairobi. A descriptive survey design was used to collect original data for describing the population and both quantitative and qualitative approaches to data collection and analysis were employed in the study. The findings were apparent in that MFIs in Nairobi do not survive on donations and as such are not a key determinant anymore for their survival. In earlier studies, it was evident that MFIs relied on donations to be able to achieve their goals, a trend that has since changed going by the findings in this study. This awkward state force MFIs to form partnerships with well-established financing institutions for purposes of easing the liquidity pressures. Significant as well are corporate governance practices have become key in ensuring that these MFIs perform well financially in addition to technological innovativeness that go a long way in ensuring that the well informed clientele gets their expectations met