MOBILE DEPOSITS AND THE FINANCIAL HEALTH OF MICROFINANCE BANKS IN KENYA
MOBILE DEPOSITS AND THE FINANCIAL HEALTH OF MICROFINANCE BANKS IN KENYA
Paul Mutembei Munyua - Department of Accounting and Finance, School of Business, Economics and Tourism Kenyatta University, Kenya
Mungai John Njangiru (Ph.D) - Department of Accounting and Finance, School of Business, Economics and Tourism Kenyatta University, Kenya
ABSTRACT
Microfinance banks (MFBs) in Kenya are facing many challenges; their business environment is greatly affected by innovations in information technology. To remain competitive, it is necessary for the MFBs to embrace new technology to enhance their ways of doing business, and mobile banking is one of these innovations. This project's main objective was finding the effects of mobile banking technology on the financial health of microfinance banks in Kenya. The specific objective included studying volumes of deposits transacted using mobile devices and the financial health of microfinance banks in Kenya; hypothesis tests were carried out on the independent variable. Cognitive theory of development and conventional theory of financial deepening were discussed for this study. The study made use of data from audited financial statements and Central Bank of Kenya (CBK) bank supervision reports, financial health information and other secondary sources in addition to primary data gathered through questionnaires and observations. A census of all the 14 MFBs in Kenya was conducted; the target population of the study was 168 employees from three departments of Accounts, Credit, and ICT; the sample size comprised 126 employees, 9 employees from each of the three departments. The study results provide crucial insights into how mobile banking affects the financial health of Kenya's microfinance banks (MFB). The results found that mobile deposits had a regression coefficient of 0.095; This showed that, when all other factors were held constant, a unit increase in mobile deposits resulted in a 0.095 rise in the financial health of Kenyan microfinance banks. The study concluded that there is a statistically significant relationship between mobile deposits and financial health at the 5% level of significance. The study recommends that the management of MFBs should place an emphasis on mobile deposits since they have an effect on MFBs' financial health.
