| dc.description.abstract | Mortgage financing helps in reducing poverty levels and the growth of informal
settlements and at the same time offering high opportunity for profitability and growth
for financial institutions that have decided to pursue such projects. The majority of
microfinance institutions however have not expanded their credit lines and financial
products to mortgage financing. Additionally, financial performance of microfinance
institutions has not been encouraging despite the fact that international and national
development programs have been giving high priority on sustainable microfinance to
the poor for many years. Therefore, this study sought to determine the effect of
mortgage financing on profitability of microfinance institutions in Kenya. The study
adopted a descriptive research design using census approach. The population for the
study was all the microfinance institutions in Kenya as at December 31st 2013.
Secondary data from financial statements of micro finance institutions offering
mortgage financing was collected for five years from 2009 to 2013, on the MFIs
profitability and mortgage financing. Multiple regression analysis was used to
determine whether the independent variable (mortgage financing) affects the
dependent variable (MFIs profitability). The study found that mortgage financing has
strong and significant positive effect on MFI profitability. MFIs Liquidity was also
found to be a key determinant of MFI profitability and has positive and significant
effect on profitability of microfinance institutions in Kenya. Loan portfolio to total
assets has weak positive effect of profitability of MFIs. Mortgage financing, liquidity
and loan portfolio combined were found to have strong positive relationship with MFI
profitability and accounted for 99% of MFI profitability. The study also found that
mortgage financing in Kenya is under developed among the MFIs with just a small
portions of loans relating to mortgage financing. The study recommends that the MFI
management to adopt mortgage financing as a way of increasing the profitability of
their MFIs and that the Central Bank of Kenya to develop regulatory framework to
assist MFIs in financing and venturing into mortgage financing business. | en_US |
