Business Studies
Volume: 130 , Issue: 1 , August Published Date: 01 August 2023
Publisher Name: IJRP
Views: 183 , Download: 157 , Pages: 1 - 24
DOI: 10.47119/IJRP1001301820235305
Publisher Name: IJRP
Views: 183 , Download: 157 , Pages: 1 - 24
DOI: 10.47119/IJRP1001301820235305
Authors
| # | Author Name |
|---|---|
| 1 | Linda Muthoni Nthiga |
| 2 | Dr. John Cheluget |
| 3 | Dr. James Mwikya |
Abstract
The organisational performances of microfinance banks in Kenya remain pertinent for both micro and macro-economic development in the country. However, according to central bank of Kenya, annual report and financial statements 2019 to 2020 and bank supervision annual report 2020, the microfinance banks recorded a combined loss before tax of KSh 1.0 billion in the year ended June 2020, compared to a loss of KSh 0.7 billion in the previous year ended June 2019. The purpose of this study was to assess the moderating influence of external environment on the link between transformational leadership and performance of microfinance banks in Kenya. The study was anchored on transformational leadership theory, open systems and stakeholder theories. The study adopted positivism research philosophy and applied cross-sectional survey design. The studys target population was the 14 microfinance banks as listed by the central bank of Kenya as of 31st December 2020. The study applied stratified proportionate random sampling and questionnaires were used to collect data from 366 respondents. Primary data was analysed using inferentially analysis. The model results revealed that there is a strong, positive and statistically significant relationship (R = 0.734, p < 0.05), between transformational leadership, external environment and performance. The model further shows R-squared = 0.539 this means that 53.9% of variation in performance can be explained by a unit change in transformational leadership and external environment. This study finding revealed that external environment significantly moderates relationship between transformational leadership and performance of microfinance banks in Kenya. The study recommends that microfinance banks adopt the use of decision support systems to increase the managers effectiveness in decision making and that the use of computerized information system makes the banking services to the customers more efficient and the use of computerized information system increases the banking staff effectiveness respectively.