Effect Of Quality Management Practices On Financial Performance Of Microfinance Banks In Kenya

Abstract

Due to the changing financial needs, many people are now appreciating the importance of microfinance. There has been an increase in the number of microfinance banks in Kenya. However, the sector still falls short on attaining efficiency hence compromising on profitability. The main purpose of this study was to determine the effect of level of management quality on financial performance of microfinance banks in Kenya specifically. The objectives of the study were toidentify the extent to which staff training costs influence financial performance of microfinance banks in Kenya, establish the extent to which operational efficiency costs influence financial performance of microfinance banks in Kenya and establish the extent to which strategic planning costs influence financial performance of microfinance banks in Kenya. The study adopted a descriptive survey design. The population of study was 6 microfinance institutions that maintained audited financial statements. Through census sampling technique all the 6 microfinance institutions were considered for the study. Secondary data was obtained through desktop research on a predesigned data collection form. Descriptive statistics was used to analyze data. Moreover, Statistical Package for Social Sciences (SPSS) was used to give the statistics. A multiple regression model was employed to determine the relationship between the independent and dependent variables. The study established that staff training costs are significant factor that influences the financial performance of microfinance banks.Moreover, the study established that strategic planning costs and operational efficiency costs had significant effect on the financial performance of microfinance banks in Kenya; this implies that the two add on financial significance.