dc.description.abstract | Microfinance has been regarded as one of the most promising means to alleviate
poverty around the world. As the Kenyan economy grows, the need of credit for
individuals and small business expansion grows like wise. Microfinance Institutions
have been lending to very few individuals and small medium enterprises while side
lining the rest due to perceived risks in small business financing. The objective of the
study was to determine the effect of Lending technologies on financial performance of
Microfinance Institution in Nairobi.
The study adopted the Descriptive Design and applied both multiple regression
models on both primary and secondary data to determine the effect of lending
technologies on performance of Microfinance Institution in Nairobi. The Asset based
lending, Financial statement lending, Small business rating system and Relationship
lending were used as independent variables. Financial performance was used as
dependent variable. The population of this study comprised of 30 Microfinance
Institutions in Nairobi and data was analyzed using SPSS.
According to the regression equation established, taking all variables constant at zero,
ratio of financial performance will be 0.063%. At 5% level of significance and 95%
level of confidence, the researcher established that the collinearity statistics of asset
based lending had a tolerance factor of 0.525, financial statement lending had
tolerance factor of 0.484, small business rating system toler
performance with an adjusted R2 of 0.207. This means that 20.7% of variation in the
dependent variable in the regression model is due to independent variables while
61.3% are due to standard error of estimate. The F- Statistics of 0.141 was also
significant. The model was therefore considered robust or fitted well to the actual data
of the variables. There is need for the Government to initiates measures that will
control the choice of lending technologies in Kenya. The study further recommends
that there is need for the microfinance institutions to initiate policies that will control
the type lending technology which is appropriate for them to operate efficiently. | en_US |