| dc.description.abstract | This study examined the relationship between financial outreach and financial
performance of micro finance institutions in Kenya. The best ways to help the poor
access financial services have been the subject of intense debate between the
welfarists and the institutionalists who hold divergent views. In this context, the paper
delved into the relationship between financial outreach and financial performance of
the MFIs in Kenya. To achieve this, a purposive sampling technique was employed on
a population of 39 MFls registered with AMFI. Secondary data spanning five years
from 2008 to 2012 was obtained from the MIX market, joint publication annual report
- 2012 on microfinance sector in Kenya by AMFI and MICROFINANZA Rating
Agency and extracts of data from financial statements of the respective MFls were
used. Data analysis was done using ratios, charts, descriptive statistics and linear
regression models obtained. The resultant econometric models had financial outreach
as the dependent variable while independent variable was financial performance and
the control variables were efficiency and productivity and portfolio quality. The
results showed that, there was insignificant relationship between financial outreach
and financial performance when the control variables were omitted from the model
but significant when they were included in the model. This was evident when the R2
values were 0.994 and 0.979 when significant, and 0.058 and 0.248 when
insignificant for both depth and breadth of outreach respectively. A strong negative
correlation was also found between financial outreach and financial performance.
Therefore relevant stakeholders should devise ways of improving on the overall
financial performance, of the MFls so as to achieve the ultimate objective of poverty
alleviation through greater financial outreach. | en_US |
