Abstract:
Competition between microfinance institutions (MFIs) in developing countries has increased
dramatically in the last decade. This study sought to investigate the effects of competition on the
loan performance of deposit taking microfinance institutions in Kenya. The study also sought to
investigate the effects of multiple loan taking, cost efficiency, selection standards and customer
relationship on the operational performance of deposit taking microfinance institutions in Kenya.
The study found that there is a relationship between multiple loan-taking, selection standards and
customer relationship cost efficiency and loan performance of the microfinance institutions. In
addition, the study also established that multiple loan-taking negatively affects loan performance
deposit-taking microfinance institutions. This study therefore recommends that MFIs should not
offer multiple loans to customers so as to improve their loan performance.
