The effect of financial innovation on the financial performance of micro-finance institutions in Kenya
Abstract
Microfinance institutions play a vital role in the economic development of many
developing countries through the provision of a wide range of financial products and
services to the poor, low-income households and micro and small enterprises. This
study investigated the factors that influence financial innovation in MFI's and its
impact on financial performance in micro finance institutions in Kenya. The study
focused on testing the effects of Financial Innovation on the Financial Performance of
MFIs for the period 2008-2012. Primary data was collected through a questionnaire
administered to the MFI's.
An analytical model was developed to determine the strength of the relationship
between variables. Analysis of the data showed that new technology, expenditure in
ICT, number of transactions in mobile banking and branch networks, had the greatest
importance in influencing MFI innovation. Therefore, financial innovation and
financial performance is positively related.
Publisher
University of Nairobi