THE EFFECT OF MARKET INNOVATION ON THE PERFORMANCE OF MICROFINANCE BANKS IN NAIROBI CITY COUNTY, KENYA
Abstract
Microfinance institutions' productivity is crucial to sustaining a healthy micro-banking system. Bad performance has an impact on microfinance banks' ability to withstand negative shocks, which has an impact on solvency. Microfinance banks face severe implementation problems, according to a report from Kenya's Central Bank. The study investigated the effect of market innovation on the performance of microfinance banks in Nairobi City County, Kenya. The research was informed by the stakeholders’ theory. An explanatory research design was adopted. The study's target population was 12 microfinance banks within Nairobi County. All the institutions were included in the study. From each of the firms, the researcher targeted managers representing the marketing department. Thus, the total number of respondents was 48. Semi-structured questionnaires were used to collect primary data for the analysis. The validity and reliability of the instrument was tested. Percentages and means were used as descriptive statistics. Pearson correlation and regression analysis were used to assess the relationship between the independent and dependent variables. The results were presented in tables and graphs. Qualitative data was presented in the form of narratives. Results showed that market innovation had a positive and significant effect on the performance of microfinance banks. The study concluded that market innovation had a positive and significant effect on the performance of microfinance banks. Further, packaging strategy was also found to be effective in attracting new customers. A promotion strategy helps in reaching out to a wider market. The study concluded that the development of new products in most microfinance banks is informed by the needs of their customers. In addition, most microfinance banks are still in competition for market share with their rivals. The study recommended that microfinance institutions that have not fully adopted market innovation as a means of improving performance should look for ways of doing so as it has been proven that there is a relationship between market innovation and organizational performance.
Keywords: Market Innovation, Microfinance Banks, Business Performance, Financial Institutions
CITATION: Aliong'o, L. K., & Waithaka, P. (2024). The effect of market innovation on the performance of microfinance banks in Nairobi City County, Kenya. The Strategic Journal of Business & Change Management, 11 (2), 1558 – 1570. http://dx.doi.org/10.61426/sjbcm.v11i2.2999
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i2.2999
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