An Investigation On The Impact Of Interest Rates On Financial Sustainability Of Microfinance Institutions In Kenya
Abstract
The high interest rates charged by many MFIs have attracted the attention of concerned
policymakers throughout the world. The main objective of the research study was therefore to
establish the impact of interest rates on financial sustainability of MFIs. The literature review
provides the reader with an explanation of the theoretical rationale of the problem being studied
as well as what research has already been done and how the findings relate to the problem at
hand. The study applied a descriptive research design and the target population was 129
respondents. The study applied a sampling technique to obtain a sample size of 65 respondents.
Questionnaires were the major data collection instruments and the gathered findings were
analyzed through the use of quantitative and qualitative analysis, tables were used to present the
findings. The descriptive and inferential statistics was used in analysis of relationships,
differences, trends and comparisons. The study found out that majority of respondents who were
50% indicated 5 years and below. The study findings found indirect relationship between cost
and financial sustainability of MFIs; however the degree of relationship is weak. There was a
direct relationship between interest rates and financial sustainability, the degree of relationship is
strong. There is direct relationship between profitability and financial sustainability of MFIs, the
degree of relationship is strong. The study recommended that the government should come up
with better interest rates policies that will make MFIs more financial sustainable. Interest rates
policies that are detrimental towards MFIs financial sustainability should be abolished. Interest
rates policies in place should make the cost of borrowing loans from MFIs more affordable to
most borrowers. Microfinance institutions should be able to meet its operational cost to be
sustainable. MFI should be able to recruit, induct, train and maintain well-qualified staff who are
capable of delivering the services as required.
Citation
Master Of Business Administration (mba) Degree, School Of Business, University Of Nairobi, 2013Publisher
University of Nairobi, School of business,