LATE MOVER STRATEGIES MATTER AND PERFORMANCE OF MICROFINANCE BANKS IN KENYA: THE MODERATING ROLE OF REGULATORY FRAMEWORK
Abstract
Purpose of Study: This study investigated the moderating role of regulatory framework in the nexus between late-mover strategies and the performance of microfinance banks (MFBs) in Kenya.
Statement of Problem: Despite the critical role played by MFBs in promoting financial inclusion and socioeconomic development, their sustainability has been threatened by fluctuating performance, declining profitability, negative returns on employee satisfaction, and rising non-performing loans.
Methodology: The study employed a descriptive and explanatory research design, targeting 389-unit managers across 13 licensed MFBs in Nairobi City County, with a sample size of 197 respondents. Data were collected using semi-structured questionnaires and analyzed using descriptive and inferential statistics. Baron and Kenny’s (1986) moderation analysis technique was applied to test the moderating role of regulatory framework on the link between late-mover strategies and performance of MFBs.
Results: The findings revealed that late-mover strategies had a positive and significant effect on the performance of MFBs (β=.198, p-value=.003<.05). Similarly, regulatory framework showed a positive effect on performance (β=.164, p-value=.005<.05). The interaction term between late-mover strategies and regulatory framework was also statistically significant, confirming a moderating effect (β=.065, p-value=.000<.05). Specifically, regulatory framework weakened the association between late-mover strategies and performance without altering the direction of the relationship as explained by R square of 56.2% down from 73.4% before moderation.
Conclusion: The study concludes that regulatory frameworks moderate the relationship between late-mover strategies and performance of MFBs in Kenya. A robust regulatory environment enhances the effectiveness of late-mover strategies, reinforcing their contribution to financial performance and organizational sustainability.
Recommendation: The study recommends that MFBs should align late-mover strategies with regulatory requirements, invest in innovation and digital transformation, and differentiate products and services to boost competitiveness.
Key Words: Late Mover Strategies, Performance of Microfinance Banks and Regulatory Framework County
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