Fraud risk management and financial performance of microfinance institutions in Kenya

Jared Mosoti, Joshua Wafula and Andrew Nyangau
Additional contact information
Jared Mosoti: Tutorial Fellow Mount Kenya University P.O. Box 342-001000 Thika, Kenya
Joshua Wafula: Senior Lecturer Department of Accounting and Finance Kisii University P.O Box 408 Kisii, Kenya
Andrew Nyangau: Lecturer, Department of Accounting and Finance, Kisii University P.O Box 408 Kisii, Kenya

International Journal of Research in Business and Social Science (2147-4478), 2023, vol. 12, issue 10, 257-262

Abstract: Fraud is a thorn in the flesh of many organizations in both local and global business ecosystems, more so in the financial sector because of the liquid nature of their services. To curb this menace, Financial Institutions including Microfinance institutions implemented fraud risk management practices. While larger financial institutions afford raft measures for curbing fraud, MFIs contend with less sophisticated practices in spite of them being the most susceptible to financial improprieties. Further, the determination of the overall effect of these practices on financial performance is critical in evaluating their success. The objective of this study therefore was to find out how fraud risk management practices affect the financial performance of Microfinance Institutions in Kenya. The study was anchored on the fraud management life cycle theory and focused on twelve deposit-taking Microfinance Institutions that were in operation in the Nairobi region of Kenya between 2016 to 2020. The study adopted a descriptive research design using cross-sectional data computed from the average financial results for five years 2016-2020. The study used purposive and stratified Random sampling methods to select a sample of 281 respondents from finance, ICT, operations, Audit, and Litigation managers and staff. The study used descriptive and inferential statistics to analyze the data. The results showed that fraud risk management positively and significantly affected financial performance by curbing incidents of fraud and concluded that to improve financial performance microfinance institutions should implement fraud risk management since they had a positive and significant effect on financial performance. The study recommended that firms should invest substantially in fraud risk management to reduce incidences of fraud and improve financial performance. Further, the management of Microfinance Institutions should continually evaluate and update their practices to keep abreast with the ever-changing fraud antics. Key Words: Fraud Risk Management, Financial Performance, Fraud Management Lifecycle Theory, Fraud

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/3073/2171 (application/pdf)
https://doi.org/10.20525/ijrbs.v12i10.3073 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rbs:ijbrss:v:12:y:2023:i:10:p:257-262

Access Statistics for this article

International Journal of Research in Business and Social Science (2147-4478) is currently edited by Prof.Dr.Umit Hacioglu

More articles in International Journal of Research in Business and Social Science (2147-4478) from Center for the Strategic Studies in Business and Finance Editorial Office,Baris Mah. Enver Adakan Cd. No: 5/8, Beylikduzu, Istanbul, Turkey. Contact information at EDIRC.
Bibliographic data for series maintained by Umit Hacioglu ().