Main Article Content
The purpose of this study was to address the research gap of how the provision of low-interest credit affects the financial performance of Microfinance Institutions in Kenya. The study was guided by the credit channeling and credit rationing theories all which look into the effect of credit provision on the wellbeing of firms and microfinance institutions in the economy. The study adopted a descriptive survey design that consisted on secondary data collected from the 13 licensed MFIs according to the CBK listing of 2016. Data analysis focused on the measures of central tendency due to their ability to describe the characteristics of the variables in question using a single number. Study findings show that the profitability of microfinance institutions is strongly influenced by interest rate spread followed by loan size, and loan design. The probability or significance values shows the significance of the relationship between independent and dependent variables. The probability values show that the profitability of MFBs is significantly influenced by interest rate spread, loan size, and loan design. Both correlation and regression analyses revealed the presence of a substantial relationship between MFB profitability and the study variables which are; interest rate spread, loan size and loan design.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.