Abstract: The study sought to assess the effect of firm characteristics on the credit risk of microfinance banks in Kenya has been analysed. The specific objectives were to examine the effect of management efficiency, liquidity, earning capacity and capital adequacy on the credit risk of microfinance banks in Kenya. The findings revealed that the income capacity depicted significant but negative impact on credit risk. Liquidity depicted a positive and insignificant influence on credit risk; moreover, inappropriate management efficiency and depicted a positive influence on credit risk; Capital adequacy depicted an inverse influence on the credit risk of Kenyan microfinance banks. Moreover, interest rates have a negative regulatory influence between company characteristics and credit risk among the Kenyan microfinance banks. Based on the findings, the study recommended that the management of microfinance banks should diversify their operations to reduce credit-related risks facing microfinance banks, which is a crucial determinant that ensures increased earning capacity.
Keywords: Earning Ability, Earnings Ability, Liquidity, Management Efficiency, Interest Rate and Credit Risk.
Title: FIRM CHARACTERISTICS AND CREDIT RISK OF MICROFINANCE BANKS IN KENYA
Author: Jared Nyakundi Momanyi, Robert Mugo
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Vol. 10, Issue 2, October 2022 - March 2023
Page No: 239-251
Research Publish Journals
Website: www.researchpublish.com
Published Date: 24-November-2022
