Determinants of Effective Balanced Scorecard on Microfinance Banks Performance in Kenya: A Case Study of Kenya Women Microfinance Bank in Kisumu City

Abstract

Microfinance has been acknowledged worldwide as a means to alleviate poverty in many parts of the world. Microfinance institutions bridge the gap between the poor and financial services. The purpose of the study was to assess the Determinants of effective balance scorecard on microfinance bank performance. The specific objective was to determine the effect of organizational learning on microfinance bank performance. The study adopted descriptive design with purposive sampling in selection of the Microfinance Banks (MFBs) that were willing to participate in the study. A structured questionnaire was administered to 30 employees, eight of whom were department heads. An exit interview was then conducted among 100 customers at the banking hall. A pilot study was conducted before data collection with a 10% representative sample. Validity was achieved through use of experts to assess the work and Cronbach alpha for reliability of the instruments. Descriptive statistics and likert scale were used to define the data. The findings of this study revealed a high index in customer satisfaction (94%) and employee satisfaction of 53%. Most of the gaps identified were in the internal business processes where ICT adoption for automation of processes was highly recommended to reduce the time taken to process loans and ATM cards. From the employee perspective, there was need to provide more training opportunities including creating the general awareness of the BSC among employees. The study concluded that overall, KWFT is performing above average in most of the components of the BSC. From the findings, results on organizational learning revealed that it had an association with factors influencing balance scorecard on performance of MFBs.

Keywords: Balance Scorecard, Organizational Learning, Microfinance Banks Performance