Abstract:
Purpose: Microfinance banks are investing in ATM banking to satisfy the requirements of the
households of accessing financial services and to achieve inclusive economic growth. The
study sought to evaluate the effect of ATM banking on performance of the microfinance banks
in Kenya. The study was postulated by technology acceptance model.
Methodology: The study adopted positivism philosophy, descriptive research design and
census survey. The target population was the thirteen Microfinance Banks regulated by the
Central Bank of Kenya. Primary data was collected using questionnaires which were selfadministered.
Descriptive and inferential statistics were used to calculate the simple means;
standard deviations and to make conclusions from the information. Data was presented using
frequency tables, and correlations table. Factor analysis was conducted to reduce the number
of factors and Kaiser Meyer Olkin and Barlett’s test of Sphericity were tested and total variance
explained, scree plot and rotated component matrix were drawn. Model R - Square, ANOVA
Statistics and regression coefficients R were used to test the hypothesis of bivariate model.
Findings: The results show that ATM banking had an R square of 0.931 and a p value of 0.000
to explain the performance of microfinance banks. The study concluded that there is a
statistically significant relationship between ATM banking and performance.
Unique Contribution to Theory, Practice and Policy: The study recommends that
microfinance banks should reinforce the security of the ATM machine and partner with other
banking institutions to invest in ATMs to reduce operation cost and this will enhance
performance of the MFBs.
