An Investigation Of Factors Influencing Sustainability Of Micro Finance Institutions [A Case Study Of Narok County].

ABSTRACT

Micro finance institutions refer to small, saving and insurance services extended and economically

disadvantaged segment of society. In the past ten years micro finance is emerging as powerful tool

of growth in Kenya economy. This has resulted from increasing success in terms to reach the poor

and sustaining delivery services. However large number of those engaged in microfinance services

continue to struggle with sustainability. The research sought to establish the factors affecting the

sustainability of microfinance institutions in Kenya and how they can be solved to promote

success, stability and better performance of micro finance institutions. The study was therefore

discover how the factors such as credit risks, geographical coverage, financial regulations, number

of clients and management affect the sustainability of MFIs.

Descriptive research design was used to outline the features of the population in interest to come

up with predictions. The questionnaires were physically delivered to the micro finance operators

to fill and were collected later. The study found that financial regulations, geographical coverage

and volume of credit transacted were the factors that highly affected the sustainability of

microfinance institutions. These factors contribute positively or negatively to the sustainability of

the microfinance institutions. The study concludes that sustainability of MFIs is a function of

related and interconnected factors. The study recommends MFIs to open many branches to reach

as many people as possible and ensure they conform to rules and regulation.