Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in Kenya
This article studies the relationship between portfolio quality and the financial sustainability of microfinance institutions in Kenya. The analysis is based on a panel dataset of 30 microfinance institutions in the period 2010 to 2018. The study is guided by institutional theory which is built on c...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Tripal Publishing House
2020-01-01
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| Series: | Journal of Economics and Financial Analysis |
| Subjects: | |
| Online Access: | https://ojs.tripaledu.com/jefa/article/view/48 |
| _version_ | 1797778135700209664 |
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| author | Stephen Kosgei BITOK Josephat CHEBOI Ambrose KEMBOI |
| author_facet | Stephen Kosgei BITOK Josephat CHEBOI Ambrose KEMBOI |
| author_sort | Stephen Kosgei BITOK |
| collection | DOAJ |
| description | This article studies the relationship between portfolio quality and the financial sustainability of microfinance institutions in Kenya. The analysis is based on a panel dataset of 30 microfinance institutions in the period 2010 to 2018. The study is guided by institutional theory which is built on conformance and continuity. The study adopts an explanatory research design where a panel approach is used under positivist paradigm. The study finds that portfolio quality has a positive significant effect on the financial sustainability at 1% statistical significance level. Based on this finding, the study concludes that portfolio quality is an essential element of MFIs financial sustainability. The study recommends that MFIs managers should devise good collection policies to improve portfolio quality while lessening loan default rate. The portfolio quality may improve the overall profitability and enhance investor confidence in their strategic decision-making on refinancing. It is important to note in order to ensure financial inclusion; the stakeholders must be involved. |
| first_indexed | 2024-03-12T23:13:56Z |
| format | Article |
| id | doaj.art-e4128c2467b74e9aad8bf8acf27f7ae7 |
| institution | Directory Open Access Journal |
| issn | 2521-6627 2521-6619 |
| language | English |
| last_indexed | 2024-03-12T23:13:56Z |
| publishDate | 2020-01-01 |
| publisher | Tripal Publishing House |
| record_format | Article |
| series | Journal of Economics and Financial Analysis |
| spelling | doaj.art-e4128c2467b74e9aad8bf8acf27f7ae72023-07-17T18:27:18ZengTripal Publishing HouseJournal of Economics and Financial Analysis2521-66272521-66192020-01-0132233910.1991/jefa.v3i2.a2728Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in KenyaStephen Kosgei BITOK0Josephat CHEBOI1Ambrose KEMBOI2Moi UniversityMoi UniversityMoi UniversityThis article studies the relationship between portfolio quality and the financial sustainability of microfinance institutions in Kenya. The analysis is based on a panel dataset of 30 microfinance institutions in the period 2010 to 2018. The study is guided by institutional theory which is built on conformance and continuity. The study adopts an explanatory research design where a panel approach is used under positivist paradigm. The study finds that portfolio quality has a positive significant effect on the financial sustainability at 1% statistical significance level. Based on this finding, the study concludes that portfolio quality is an essential element of MFIs financial sustainability. The study recommends that MFIs managers should devise good collection policies to improve portfolio quality while lessening loan default rate. The portfolio quality may improve the overall profitability and enhance investor confidence in their strategic decision-making on refinancing. It is important to note in order to ensure financial inclusion; the stakeholders must be involved.https://ojs.tripaledu.com/jefa/article/view/48portfolio qualityfinancial sustainabilitymicrofinance institutionsinstitutional theory. |
| spellingShingle | Stephen Kosgei BITOK Josephat CHEBOI Ambrose KEMBOI Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in Kenya Journal of Economics and Financial Analysis portfolio quality financial sustainability microfinance institutions institutional theory. |
| title | Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in Kenya |
| title_full | Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in Kenya |
| title_fullStr | Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in Kenya |
| title_full_unstemmed | Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in Kenya |
| title_short | Does Portfolio Quality Influence Financial Sustainability? A Case of Microfinance Institutions in Kenya |
| title_sort | does portfolio quality influence financial sustainability a case of microfinance institutions in kenya |
| topic | portfolio quality financial sustainability microfinance institutions institutional theory. |
| url | https://ojs.tripaledu.com/jefa/article/view/48 |
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