dc.contributor.author | Kisala, Peterson M | |
dc.date.accessioned | 2014-12-01T07:37:43Z | |
dc.date.available | 2014-12-01T07:37:43Z | |
dc.date.issued | 2014-11 | |
dc.identifier.citation | Degree of master of business administration school of business, University of Nairobi | en_US |
dc.identifier.uri | http://hdl.handle.net/11295/75700 | |
dc.description.abstract | Credit risk has always been a concern not only to bankers but to the entire business world
because the risks of a borrower not fulfilling his obligations in full on due date can seriously
jeopardize the performance of a financial institution. This study sought to review the effect of
credit risk management on the loan performance of microfinance institutions in Kenya. The
research design used in this study was descriptive research design as it involved an in depth
study of credit risk management and its relationship with loan performance in micro finance
institutions. Primary data was collected through questionnaires while Secondary data collected
from the micro finance institutions annual reports (2007-2011) was used. The study populations
were the 9 micro finance institutions licensed by the Central bank of Kenya; however data was
obtained from 5 micro finance institutions. The data collected from the annual reports of the
micro finance institutions was analyzed using multiple regression analysis. In the model
return on equity was used as the profitability indicator while non-performing loans ratio and
capital adequacy ratio as credit risk management indicators. This study showed that there is
significant relationship between loan performance and credit risk management.
The results of the analysis states that both non-performing loans ratio and capital adequacy ratio
have negative and relatively significant effect on return on equity with NPLR having higher
significant effect on ROE in comparison to CAR. Hence, the regression as whole is significant;
this means that NPLR and CAR reliably predict ROE. Having established a relationship
between credit risk management and the financial performance of micro finance institution, the
research suggests that all micro finance institutions should adopt accredit risk grading system | en_US |
dc.language.iso | en | en_US |
dc.publisher | University of Nairobi | en_US |
dc.title | The effect of credit risk management practices on loan performance in microfinance institutions in Nairobi, Kenya | en_US |
dc.type | Thesis | en_US |
dc.type.material | en_US | en_US |