AN INVESTIGATION OF FACTORS INFLUENCING SUSTAINABILITY OF MICRO FINANCE INSTITUTIONS [A CASE STUDY OF NAROK COUNTY]

Abstract

ABSTRACT Micro finance institutions refer to small, saving and insurance services extended and economically disadvantaged segment of society. In the past ten years micro finance is emerging as powerful tool of growth in Kenya economy. This has resulted from increasing success in terms to reach the poor and sustaining delivery services. However large number of those engaged in microfinance services continue to struggle with sustainability. The research sought to establish the factors affecting the sustainability of microfinance institutions in Kenya and how they can be solved to promote success, stability and better performance of micro finance institutions. The study was therefore discover how the factors such as credit risks, geographical coverage, financial regulations, number of clients and management affect the sustainability of MFIs. Descriptive research design was used to outline the features of the population in interest to come up with predictions. The questionnaires were physically delivered to the micro finance operators to fill and were collected later. The study found that financial regulations, geographical coverage and volume of credit transacted were the factors that highly affected the sustainability of microfinance institutions. These factors contribute positively or negatively to the sustainability of the microfinance institutions. The study concludes that sustainability of MFIs is a function of related and interconnected factors. The study recommends MFIs to open many branches to reach as many people as possible and ensure they conform to rules and regulation