| dc.description.abstract | The objective of the study was to determine the factors explaining the profitability of
Micro Finance institutions in Kenya. The research used a survey method to assist the
researcher achieve the objective of the study. The population of the study comprised of
all operational Micro Finance Institutions registered in Kenya by June 2007. Convenient
sampling technique was used to select the sample. The study also used secondary data
that was obtained from the financial statements of individual MFIs in Nairobi.
The results showed that profit before tax depended mainly on interest income, interest
expense, shareholders funds, loans and advances to customers. Other significant
determinants on profitability of microfinance institutions include provision for bad and
doubtful debts and deposits & balances due from other financial institutions. The
measures that were considered very important in the determination of financial
performance by the participants included operational costs, debt equity portfolio at risk
and labour productivity. Financing costs was reported to be a major proportion of cost in
the organization.
The factors that were rated as highly significant by the respondents in determining
financial sustainability include: repayment rate, average loan size, saving deposits and
operational costs. Loan size, average size of saving deposits and number of branches
were rated moderately significant in determination of financial stability. | en |
