A Study on Financial Risk Management Practices of Micro Finance Institutions

Abstract

The study is set to explore the liquidity risk management practices by MFIs in Kenya. Emphasis was on the following; understanding the process of liquidity risk identification by MFIs, the extent to which MFIs are classified, monitor liquidity risks, liquidity risk exposure of MFIs and to identify the various practices that the MFIs adopt in managing the liquidity risks. The objective of the study was to examine the effects of credit risk management practices on financial performance of Microfinance Institutions. This article will explore credit, liquidity, operational, and strategic risk to better understand microfinance firms' financial risk management techniques. These methods reveal how MFIs promote financial inclusion and alleviate poverty while managing financial risk.