Determinants of profitability of deposit-taking microfinance institutions and co-operative socities that have front office service activities registered with Sasra
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Date
2012-10Author
Ongaki, Belydah K
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The study aimed to examine the determinants of financial performance of deposit-taking microfinance institutions and co-operative societies that have front office service activities and are registered with SASRA.
The research design was descriptive survey. The study used a sample of 11 SACCOs with FOSA and 6 MFIs. Secondary data spanning three years was used. A regression model was used to establish determinants of financial performance of deposit-taking microfinance institutions and co-operative societies that have front office service activities financial performance of portfolios of investment firms in Kenya.
This study found that there is a positive relationship between profit ratio and interest income ratio. Therefore, an increase in interest income ratio leads to an increase in profit margin. This study also found that there is a positive relationship between profit ratio and non interest income ratio. An increase in non interest income ratio leads to an increase in profit margin. The other finding from the results is that there are a negative relationship between profit ratio and non interest expense ratio. An increase in non interest expense ratio leads to a decrease in profit margin. Regression results indicate that there is a negative relationship between profit ratio and liquidity ratio. An increase in liquidity ratio leads to a decrease in profit margin. Regression results also indicate that there is a positive relationship between profit ratio and asset quality ratio. An increase in asset quality ratio leads to an increase in profit margin. Finally, there is a positive relationship between profit ratio and financing ratio. An increase in asset financing ratio leads to an increase in profit margin.
This study recommends that financial institutions should improve the interest income ratio by aggressively marketing their loans products and expanding their market territory.
They should also improve non interest income ratio, non interest expense ratio, financing ratio, liquidity ratio and asset quality ratio.
Publisher
University of Nairobi School Of Business, University Of Nairobi
Subject
determinants of profitabilitydeposit-taking
microfinance institutions
co-operative socities
front office service activities
sasra