Exploration of Relationship between Group Dynamics and Client Exit from Microfinance Institutions: A Case of Kenya Women Finance Trust North Rift Region, Kenya

Abstract

The study took place in the North Rift Region of Kenya, where the problem was identified for exploration of the relationship between group dynamics and client exit from microfinance institutions. In recent times, many people have been attracted to the first borrowing but are declining to take a repeat financial product. Repeat borrowing is critical for the long-term financial viability of Microfinance Institutions (MFIs). High client exits may hamper organizational and financial sustainability. The study sought to establish the relationship between group dynamics and client exit. The study adopted the Diffusion of Financial Mechanisms Theory by Di Maggio and Powell. The study also adopted a conceptual framework to guide the process of loan clients in transit. The beneficiaries of Kenya Women Finance Trust in the North Rift Region of Kenya include a total of 37,520 clients. To obtain a sample, the researcher used a stratified sampling technique to categorize clients into eight towns according to where they received their loans. Proportionate random and snowball sampling were used to select a total of 300 clients from the towns in the North Rift Region of Kenya. Questionnaires were used to collect data from the sample. The study was quantitative in nature, and survey methodology was adopted. A pilot was administered to adjust the items for the study. It was appropriate to conduct a pilot and find out the Cronbach Alpha. Tests were done by identifying a pilot sample, collecting necessary data, and using the test-retest technique and Spearman's correlation coefficient to determine the level of reliability. Data were analyzed by descriptive and inferential statistics. The findings indicated that there was evidence that group dynamics had a significant negative correlation with client exit. As this research took place in the Kenyan context, it contributes to the bank of findings relating to curbing client exit.