Determinants Of The Uptake Of Micro Finance Products Among Commercial Banks In Mombasa County, Kenya

Abstract

Microfinance remains one of the most important tools which can be used in poverty eradication and achievement of Millennium development goals (MDGs) especially MDG 1 which aims at eradicating extreme poverty and hunger by the year 2015.It enables the poor not only to save but also to borrow money with little or no collateral enabling them meet their social and financial aspirations.Recently,most commercial banks have ventured into microfinance either through directly offering microfinance products through their mainstream banks or through fully-owned subsidiaries dealing exclusively with microfinance. The main objective of this study was therefore to examine the determinants of uptake of micro finance products among commercial banks in Mombasa County, Kenya. Related literature review was done on the independent variables which included Interest rates, competition, and technology and customer retention. The researcher found out that there was a correlation between interest rates and the uptake of microfinance products and services among commercial banks in Mombasa County. There was also a positive correlation between technology and the uptake of microfinance products among commercial banks in Mombasa County. Mobile banking and internet banking were some of the technology researched on. Based on the findings of the study, it was prudent for the researcher to conclude that interest rates charged by a bank on micro products and services had a significant influence on their uptake among commercial banks. The researcher also concluded that competition was a key indicator and had a significant influence on the uptake of microfinance products and services among commercial banks in Mombasa County. On technology, the researcher concluded that it plays a pivotal role in modern day banking and especially on access and uptake of micro finance products. The researcher found it prudent to suggest further research on factors that propel customers to prefer commercial banks to micro finance institutions when it comes to uptake of micro finance products and services. The research employed descriptive survey design and both qualitative and quantitative data was collected. Data collection instruments used were questionnaires and interview guides. The quantitative data from the study was coded and entered into a computer for analysis using the statistical Package for Social Sciences (SPSS). Independent sample T-test and Chi square test of independence at 95% level of confidence was used in this study. The level of significance at probability level of 5% was applied.