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INFLUENCE OF MOBILE BANKING ON GROWTH OF MICRO FINANCE INSTITUTIONS IN KENYA
 
Maurice Onzere Ala
Jomo Kenyatta University of Agriculture


Dr.  Patrick Karanja
Jomo Kenyatta University of Agriculture

 
ABSTRACT

MFIs in the developing world are increasingly deploying the use of mobile banking to increase growth. The pace of transformation in the MFI sector has speeded up with more MFIs realizing the potential of using the mobile banking in their service delivery. However, there are only a handful of studies on the effect of mobile banking on growth of micro finance institutions.  A population of 360 management staff was identified from three levels of management, which included top management, middle level and lower management. The study used both primary and secondary data. The questionnaire included both structured and unstructured questions. The questionnaire was administered through the drop and pick method to the top, middle and lower managers in the MFIs. The study found out that regulatory requirements influences the growth of MFI to strengthen the governance and internal control structures ; that the profitability and growth of MFIs has led to commercialization and integration of MFIs into the formal financial sector ; that the specialized equity funds help compensate for the lack of private sector representation on MFI boards; that the growth of MFIs tend to have a strong interest in overseeing both the commercial and social objectives; that the growth of MFIs provides sustained access to multiple sources of capital. The study recommends the regulatory authorities to strengthen the governance and internal control structures; integrate of MFIs into the formal financial sector; offer specialized equity funds to help compensate for the lack of private sector representation on MFI boards.


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