Effect of Credit Monitoring Practices on Loan Nonperformance among Microfinance Institutions in Nairobi County, Kenya

The Kenyan microfinance industry faces many challenges. Studies point to nonperforming loans as one of the main problems facing institutions in Kenya, which has led reduced profitability and institutional collapse some cases. Noncompliance with credit monitoring loan policy provisions have been cited factors leading increased non-performing loans. objective was determine effect Credit Monitoring on among Nairobi County. Information Asymmetry theory guided study. study’s goal assess how management methods County’s influence amount study employed correlation research design where a quantitative approach adopted. Stratified proportionate random sampling adopted data obtained from 48 population constituted 192 respondents comprising general managers, finance officers, accountants. sampled 128 staff who responded questionnaires designed 5-point Likert scale. Data were subjected analysis by use SPSS, demonstrated possible relationships variables while regression predicted effects changing defaulted found that there positive significant practice (β=-0.498, t=-5.099, p< 0.05). null hypotheses rejected alternative accepted had nonperformance entities County, Kenya. Based findings study, researcher recommends should strengthen credit-monitoring practices minimize debt writing off nonperformance.