| dc.description.abstract | The study has two major objectives firstly, to determine the various performance
measures used by MFIs in Kenya. Secondly, to evaluate performance of MFIs for a
five year period running from 2000 to 2004. Given the importance of Microfinance
to social-economic development of a nation and the correlation between MFI
performance and socio-economic growth, MFI performance is thus an issue that
needs consistent monitoring to ensure positive outcomes. Credit is the engine of
economic growth in capitalism, because it supplies the much needed investment
capital to private entrepreneurs. Thus, if the macro-financial system operates
properly, a capitalistic economy grows rapidly, making both individuals and the
nation better off.
The study entailed a descriptive survey design. The population of study comprised
all MFls in Kenya, amounting to over 3,000 legally constituted entities. The
sample selected was those MFIs that fall under the umbrella of the Association of
Microfinance Institutions of Kenya (AMFI) between the year 2000 aI?d 2004. A
sample of 22 institutions, obtained from AMFI was used. Data collection was done
using a questionnaire for primary data and a secondary data collection form for
secondary data. Primary data was used to determine those performance measures
used by MFIs and the extent to which these are used, while secondary data was
used for determining the actual performance of the MFIs for the period under
consideration. Data analysis was conducted using descriptive statistics and trend
analysis.
The finding of study shows that most of the performance measures presented were
significantly used by the MFIs. The MFIs personnel rated their performance on
these measures as ranging from average to good on the five point Likert scales.
<The most widely used financial and non-financial measures included: Return on
Investment, Return on Capital Employed and Net Profit Margin (Profitability
measures), Debt ratio, Debt-Equity ratio and the Times Interest is Earned
(Leverage ratios), Current and Quick ratios (Liquidity ratios), and Credit decision
cycle time, Transaction accuracy and timeliness, Zero defects, Loan processing
cycle, Product quality and Continuous improvement (Non-financial measures). On
the other hand the following measures were least or never used by MFIs: Dividend
per Share, Earnings per Share, Market Book Value per Share, Earnings Yield and
Price to Earning ratio. Trend analysis on the performance of the MFIs revealed
some favourable minimal improvement performance over the period 2000 to 2004.
In view of the above there is need for government to put measures in place to instil
prudence in the management of this sector. These measures will ensure
information disclosures that will improve transparency and efficiency in the sector
as a whole. | en |
