Abstract:
This study sought to investigate causes of loan default within MFIs and Financial Intermediaries
(FIs) in Kenya. The specific objective addressed was to evaluate the influence of loan characteristics on loan
default in MFIs and FIs. A target population of 48 MFIs institutions and 76 Financial Institutions was used. A
multistage sampling procedure and a sample of 48 MFIs and 48 FIs were selected. Random sampling was used
to select the respondents since each participant had an equal opportunity to be selected. Primary data was
collected by use of a questionnaire and analyzed by quantitative methods by use of SPSS; Version 21.
Descriptive statistics and inferential statistics were employed to make generalizations. Data was presented in
form of frequency tables, bar charts and pie charts for easy interpretation of results. A multiple regression
model and Pearson correlation were used to establish relationships among the variables. The findings of the
study indicated loan characteristics were significant among MFIs and FIs but with some differences in the
parameters measured .The findings are of significance to policy makers, MFIs, FIs, small businesses,
universities and the general public as a source of knowledge for future reference.
