The Relationship Between Capital Structure and Financial Performance of Microfinance Institutions in Kenya

Abstract

This study was about the relationship between capital structure and the financial performance of MFIs in Kenya. The dependent variable for the study was operational self-sufficiency which measures the sustainability of MFIs. The indepedent variables for the study included outreach, portfolio size, debt to equity ratio, debt to total assets and equity to total assets. The study used logistic regression in analysing data drawn from a database of financial statements of MFIs in Kenya for the year 2009. The results indicate that outreach and portifolio size had a positive effect on financial performance of MFIs in Kenya.