FINANCIAL TECHNOLOGY PRACTICES AND FINANCIAL PERFORMANCE OF MICROFINANCE INSTITUTIONS IN NAIROBI CITY COUNTY

Abstract

The study aimed at determining the effect of financial technology practices on the financial performance of MFIs in Nairobi City County. The study was limited to the following objectives; to determine the effect of mobile banking on the financial performance of MFIs in Nairobi City County, to assess the effect of security technology on the financial performance of MFIs in Nairobi City County, to determine the effect of investments and capital market technology on the financial performance of MFIs in Nairobi City County, and to evaluate the effect of insurance technology on the financial performance of MFIs in Nairobi City County. The study adopted technology acceptance model, general systems theory, theory of financial innovation and the theory of financial intermediation in explaining the underlying effect of financial technology practices on performance of MFIs. Cross sectional survey design employed in the study in order to develop an understanding of financial technology practices effect on financial performance. The target population was 108 respondents drawn from 13 MFIs in Nairobi and will comprise top, and middle management employees. A simple random sampling technique used to select the MFIs while purposive sampling was adopted in selecting the employees to be involved in the study. This technique ensured that only respondents with desired knowledge for the study were selected. Primary data will be obtained through a set of questionnaires. Data analysis involved both qualitative and quantitative analysis. Qualitative data was analyzed using content analysis, whereas quantitative data was analyzed using descriptive and inferential statistics. The study also performed multiple linear regression analysis to establish the degree of relationship between the financial technology practices and financial performance of MFIs. The results showed that mobile banking, security technology, insurance technology had significant positive effect on financial performance of MFIs in Nairobi county. Investment technology had a significant negative effect on financial performance of MFIs in Nairobi county. The study recommended for robust implementation of policies that would enable MFIs to improve on their financial performance. further studies were recommended on other non-financial factors that affect performance of MFIs in other sectors. Key Words: Financial Technology, Mobile Banking, Security Technology, Capital Market Technology CITATION : Muchiri, C. M., & Juma, D. (2023). Financial technology practices and financial performance of microfinance institutions in Nairobi City County. The Strategic Journal of Business & Change Management, 10 (4), 949 – 960. http://dx.doi.org/10.61426/sjbcm.v10i4.2798