Abstract: The need for establishment of CRB services in any financial system arises because of information asymmetry between lenders and borrowers. The study aims to assess the strategic role of credit referencing bureau on credit risk management on microfinance institution in Kericho County. It was guided by four objectives: To determine the influence of credit information sharing on the credit risk management on microfinance institutions in Kericho county; To establish the effect of credit scoring on microfinance institutions in Kericho county; To analyze the role of the reduced moral hazard on microfinance institutions in Kericho county; To establish the effect of loan portfolio diversification on microfinance institutions in Kericho county. The study was guided by four theories namely; Theory of Asymmetric Information; Adverse Selection Theory; Moral Hazard Theory; Information Theory of Credit; Power Theory of Credit .The study adopted a descriptive research design and The researcher targeted the 10 microfinance. The study targeted employee of microfinance in the county. This study adopted Cluster sampling technique. Both descriptive and inferential statistics were adopted for the study. The quantitative data was analyzed by using descriptive statistics which includes frequency distribution tables and measures of central tendency (the mean), measures of variability (standard deviation) and measures of relative frequencies. The inferential statistics included a regression model which established the relationship between variables. Data was analyzed by the use of a statistical software SPSS version 20. Data was presented in the form of tables and charts. Looking at the variables collectively, it’s evident from the table that 59.2% of variance in the credit risk management practices by Commercial banks. 59.2% of the variations in the credit risk management practices by Commercial banks can be explained by the identified independent variables: Credit Information Sharing, Credit Scoring, Reduced Moral Hazard, and Loan Portfolio Diversification.
Keywords: financial system, credit risk management, microfinance institutions in Kericho county.
Title: STRATEGIC ROLE OF CREDIT REFERENCING BUREAU ON CREDIT RISK MANAGEMENT IN MICROFINANCE INSTITUTIONS IN KERICHO COUNTY
Author: CHEPKOECH CORAZON, DANIEL KAMAU KARABA, DR KEPHA OMBUI
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Research Publish Journals
