| dc.description.abstract | For the past few years, central bank of Kenya through the monetary committee has actively
changed base lending rate from time to time. This has mostly been attributed by inflation and
exchange rate. Subsequently the no of microfinance bank have risen from one in year 2009 to
twelve by 31st may 2015. The objective of this study was to find out whether there exists a
relationship between change in base lending rate and the growth of microfinance banks in
Kenya. The study involved collecting and analyzing secondary data from Central Bank of
Kenya, individual microfinance banks and the Association of Microfinance Institutions in
Kenya. Purposive sampling was used to select nine microfinance banks that were used in the
study. The reference period was from 2010-2014. Ordinary least squares regression model
was used in this study where testing was done at α=0.05 level of significance. The study
showed that there is a statistically significant negative relationship between both based
lending rate and management efficiency and microfinance institutions growth. On the
contrary, the study showed that there is statically significant positive relationship between
credit terms and growth of microfinance banks. The study recommends that individual MFIs
should endeavor to vary their loan products so as increase their gross loan portfolio by
attracting more borrowers even when CBK lending rates are high. The fact that data was
collected from existing data bases may bias the study findings and thus the results of this
study cannot be generalized to other commercial banks or other MFIs in other parts of the
world. Future studies could employ primary data in carrying out a similar study for
comparison purposes. There is also need to conduct other studies on credit lending MFIs and
Sacco‟s to check whether the base lending rates have similar effects on their growth | en_US |
