Effect Of Innovation Of Financial Performance Of Deposit Taking Micro Finance Institution.

Effect Of Innovation Of Financial Performance Of Deposit Taking Micro Finance Institution: A Census Survey In Nairobi County, Kenya

By Lilian Wanjiru Gachoki

As the world’s financial markets become increasingly integrated and globalizes, the demand for new types of investments continues to grow. Ability to innovate and the effects of innovation become the major element results in the existential threat to deposit taking Micro Finance institutions. Financial performance is essential to the survival of firm. Changes in the international financial environment and the increasing integration of domestic and international financial markets also lead financial innovation. This study sought to investigate effect of innovation on financial performance of deposit taking micro finance institutions. The study was guided by the following specific objectives, that is, to determine how product innovation, market innovation, process innovation and technological innovation affect financial performance of the DTMs in Kenya. The target population of this study was senior, middle and low level managers in product development, IT, operation department and marketing department in each DTM headquarter in Nairobi. The study relied mostly on primary data source. The study employed a random sampling technique in coming up with a sample size of 72 respondent. The study generated both qualitative and quantitative data where quantitative data was coded and entered into statistical packages and analyzed using descriptive statistics. Based on the study findings the study concluded that product diversification and product development are the key success factors in product innovation strategies. Likewise, improved and radically changed products are regarded as particularly important for long term DTM growth and that products at the DTM have been updated and completely renewed for retaining strong market presence. Further, the study concluded that most organizations have adopted process innovation while process innovation in used mostly on increasing profit, enhancing quality personnel, saving of cost and increasing competitiveness.