The Relationship Between Borrowing Interest Rates and Nonperforming Loans in Deposit Taking Micro Finance Institutions in Kenya
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Date
2013-10Author
Simba, Dominic Morara
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Over the last five years, the country has witnessed a tremendous increase in the number
of the Deposit Taking Microfinance Institutions. This can be attributed to the fact that
some of the Microfinance Institutions have transformed themselves into the Deposit
Taking Microfinance Institutions. Although this institutions were established to assist
low income by providing cheaper credit, it has however not been the case as borrowing
interest rates have been on the increase over the years .The borrowers now have to
contend with the additional funds demanded by the DTMs and those who are unable to
repay end up being defaulters. The objective of this study therefore was to find out
whether there exists a relationship between borrowing interest rates and the level of
nonperforming loans in the Deposit Taking Microfinance Institutions in Kenya. The
study involved collecting secondary data from Central Bank of Kenya, individual Deposit
Taking Microfinance Institutions and the Association of Microfinance Institutions in
Kenya. Consequently data for four DTMs was analyzed for five years (2008-2012) using
SPSS statistical software and results presented in graphs, regressions and coefficients.
Test of significance was further carried out. The results showed that there was no
significant relationship between borrowing interest rates and nonperforming loans in the
Deposit Taking Microfinance Institutions Kenya. This study therefore concludes that
there could be other factors which could be responsible for the nonperforming loans in
the DTMs in Kenya. The study therefore recommends further study to be carried out on
other variables which could be responsible for the nonperforming loans such as judicial
processes and corporate governance.
Citation
Degree Of Master of Business Administration (MBA)Publisher
University of Nairobi School of Business
Description
A research project submitted in partial
fulfillment of the requirements for the award of the
Degree of Master of Business Administration, University of
Nairobi