Abstract:
The purpose of this study was to establish the role of legal compliance in the transformation of
microfinance institutions into microfinance banks in Kenya. The target population was 48
members of the Association of Microfinance Institutions as at 1st January 2013. Using purposive
sampling, the study selected 25 institutions from which 100 respondents were selected using
simple random sampling. A questionnaire was used to collect data. This study established that
legal compliance had a significant effect on the transformation of microfinance institutions into
microfinance banks in Kenya. Thus, it concluded that legal compliance played a significant role
in the transformation of microfinance institutions into microfinance banks in Kenya. The study
recommends that for transforming Microfinance Institutions to comply with the legal
requirements with ease, they should first fully understand the licensing process. The study also
recommends further research to determine the impact of regulating microfinance in Kenya.
Key words: Microfinance, Microfinance Institution, Transformation, Licensing, Legal
compliance, Microfinance Bank.
IJRDO
