EFFECT OF PROCESS INNOVATIONS ON FINANCIAL PERFORMANCE OF MICROFINANCE BANKS IN KENYA
Abstract
The financial success of a country's microfinance banks is essential for the stability of the banking system and the economy as a whole. Kenyan microfinance institutions have continued to incur rising losses, indicating poor financial performance. These banks can enhance their financial performance by offering specialized financial services and solutions to decrease expenses and information imbalances. This research examines the impact of process improvements on the financial performance of Kenyan microfinance banks from 2014 to 2021. All fourteen approved microfinance institutions in Kenya were polled using an unbalanced panel. Using a document review guide, secondary data from the financial records of these institutions was extracted using a census. For descriptive statistics, means and standard deviations were utilised, whilst panel multiple regression analysis and correlation analysis were utilized for inferential analysis. The study found that process changes had a statistically significant influence on the financial performance of Kenyan microfinance institutions. The findings indicated that process improvements aid microfinance institutions in enhancing their financial performance. As a result of the study, it was suggested that microfinance bank management use process improvements to improve their financial performance.
Key words: Process Innovations, Mobile Banking, Pesa Link, Digital Field Application, Financial Performance
CITATION: Omwanza, C. O., Jagongo, A. J., & Ndede, F. W. S. (2022). Effect of process innovations on financial performance of microfinance banks in Kenya. The Strategic Journal of Business & Change Management, 9 (2), 1193 – 1202.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i2.2326
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