The Relationship Between Profitability and Outreach of Microfinance Institutions in Kenya
Abstract
The purpose of this study was to establish the relationship between profitability and
outreach of microfinance institutions in Kenya. The study adopted a survey research
design of the institutions in Nairobi. The data collected for the purpose of establishing
the above relationship was of secondary nature and it was obtained partly from the
published financial statement of microfinance institutions and some of the data was
obtained through a formal request from the microfinance institutions. The researcher
managed to obtain complete data for 19 microfinance institutions out of the total of 26
that were the target of this study. Regression analysis was used to establish the
relationship. The findings revealed that microfinance outreach through its three
variables of number of clients who opened accounts with the institutions from 2008 to
2012, the deposits made every year and the outstanding loan portfolio explains a
significant percentage of the variable on the profitability of microfinance institutions
in Kenya. The largest portion of the variance explained by these three variables it
accounted for by the number of clients and the outstanding loan portfolio. However,
the three variables;number of clients with accounts opened by the MFIs, amount of
deposits or savings held each year and amount of outstanding loan portfolio still leave
a large portion of unexplained variance that is accounted for by other variables
outside the scope of this study.
Citation
Master Of Business Administration, University Of Nairobi, 2013.Publisher
University of Nairobi, School of Business