Influence of Credit Risk Management Practices on Loan Performance of Microfinance Institutions in Baringo County

The purpose of this study was to investigate the effect of credit risk management practices on loan performance in MFIs in Baringo County. The study employed a descriptive research design and was based on a survey of MFIs in Baringo County. The target population in this study was managers and credit officers in MFIs in Baringo County. Census sampling technique was used because all branch managers and credit officers were directly targeted in this study. Questionnaire was used to collect data. Descriptive and inferential statistics were used in data analysis. Descriptive statistics including percentages and frequencies while inferential statistics used included Pearson correlation and regression analysis. The study concluded that there was a strong relationship between client appraisals and loan performance in MFIs. The study revealed that an increase in client appraisal led to an increase in loan performance in MFIs in Baringo County. Thus the study concludes that credit risk management practices significantly influenced loan performance of MFIs in Baringo County. The study recommends adoption of a more stringent policy on credit risk management practices in MFIs in Baringo County so as to improve their financial performance.