EFFECT OF CREDIT POLICY ON GROWTH OF MICRO-FINANCE INSTITUTIONS

Frederick Wara, Benard Baimwera, Doreen Mutegi

Abstract


Abstract: The purpose of the study was to determine the effect of credit policy on growth of Micro-finance institutions in Kenya. This study adopted a descriptive research design targeting all DTM extending credit facilities to their clients. The population of study consisted of 13 deposit taking MFIs in Kenya that are members of AMFI while sample size was 100 staff members of the deposit taking MFIs. Primary data was collected using questionnaires where all the issues on the questionnaire were addressed. The sampling technique for selecting the employees was stratified sampling technique. The study confirmed that the relationship between credit policy and growth of MFIs was statiscically significant. This study recommended that deposit taking MFIs should have clear credit policies to avoid default of repayment of microfinance loans; this is because if microfinance does not have stringent credit policy then they stand to lose their money hence creating liquidity issues and should also improve and include new credit management strategies to enhance growth.

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