Effect of Market Structure on Financial Performance of Deposit Taking Microfinance Institutions in Nairobi City County, Kenya

Abstract

The purpose of this study was to investigate the effect of market structure on financial performance of Deposit Taking Microfinance Institutions (DTMIs) in Nairobi City County, Kenya. Mixed method of research design was used and data was collected using questionnaires and secondary data collection sheet. Target population was the 12 registered DTMIs in Kenya from which sixty (60) portfolio managers and credit officers were randomly selected to form the sample size. Cronbach test of 0.809 was obtained and validity of the research instruments was ensured through content, criterion and construct validity testing. Data was analyzed using descriptive statistics and inferential statistics which included correlation analysis, ANOVA and multiple regression analysis. The study established a positive statistically significant relationship between market structure and financial performance. The market structure explained 62.2% of the changes in the financial performance DTMIs in Kenya. It’s recommended that, market share should be strengthened in financial institutions to enable them proactively increase their deposit accounts and number of clients.

Keywords: market structure, financial performance, Deposit Taking Microfinance Institutions (DTMIs)