| dc.description.abstract | An effective system that ensures repayment of loans by borrowers is critical in dealing with asymmetric information problems and in reducing the level of loan losses, thus the long-term success of any banking organization. Credit risk arises from non performance by a borrower by either inability or unwillingness to perform in the pre-committed contracted manner. While Kenya has more than 250 organizations that practice some form of micro finance business, only 20-practice pure micro finance, of which 3 are deposit-taking and 17 are credit only.
This study sought to investigate the relationship between credit risk management practices and financial performance of Microfinance Institutions in Kenya. The objective of the study was to examine the effects of credit risk management practices on financial performance of Microfinance Institutions in Kenya. Exploratory research design was chosen because it enabled the researcher to generalise the findings to a larger population. The population of this study comprised of all licensed Microfinance Institutions in Kenya. The population of this study comprised all the 43 licensed Microfinance Institutions in Kenya.
Inferential statistic was used to establish the relationship between credit risk management practices and the financial performance of MFIs, financial performance ofMFIs was measured by their profitability.
From the findings the study concludes that Microfinance Institutions in Kenya have adopted various credit risk management practices which are; Risk Monitoring, Risk Identification, Risk Analysis and Assessment. The study concluded that there is positive relationship between credit risk management practices and financial performance of Microfinance Institutions in Kenya. | en_US |
