Impact of Structure Related Firm Characteristics on Performance of Microfinance Institutions in Nakuru, Kenya

Microfinance institutions are established to finance small enterprises, however they do not meet this. In spite of the importance of this sector, the provision and delivery of services has been below expectation. Literature suggests that structure related firm characteristics determine performance of microfinances but it is not clear to what extent. The objective of study was to examine the impact of structure related firm characteristics on the performance of the microfinance sector in Kenya. The study adopted correlational research design. A census was done on the 52 institutions registered with AMFI and operating in Nakuru. Primary data was collected using questionnaires. This was supplemented with secondary data. Data on firm characteristics and organizational performance was summarized using descriptive statistics. The relationship between structural firm characteristics and performance of MFIs was examined using correlation. The effect of structural firm characteristics on performance of microfinances was determined by regression analysis. Findings revealed that structural firm characteristics have a significant positive effect on performance of MFIs. It is recommended that practitioners address and nurture these characteristics to improve on performance of the sector.