Effect Financial Technology Credit, Credit Sharing and Bank Regulation on the Performance of Microfinance Institutions in Kisumu City

In Kisumu City, Kenya, microfinance institutions (MFIs) are key in the provision of financial services to low-income earners. Notwithstanding the evolution of financial technologies (Fintech), with its potential to provide innovative solutions that can improve financial inclusion, there are a number of obstacles to fully exploit these advancements. The practical problem which this study seeks to address is the knowledge gap as to how Fintech credit and credit sharing, and banking regulations influence the performance of MFIs in Kisumu City. The critical knowledge void is an understanding of how Fintech credit, credit sharing and banking regulations specifically influence the financial performance of MFIs. The aim is to develop a robust understanding of how each factor affects the financial health of MFIs so as to contribute to data-based improvement and targeted interventions. The study is based on financial intermediary theory and asymmetric information theory that have theoretical implications for understanding how financial technologies and regulatory frameworks may influence financial performance and the management of risk. Correlational survey as a research design is used to obtain data from 60 respondents, branch managers, credit officer and operations manager working in all the twelve MFIs in Kisumu City. The survey instruments were tested for reliability using the Cronbach's alpha coefficient (total scale, 0.916), verifying consistency of the data. Descriptive and inferential statistics were utilized to analyze the data. The findings reveal that Fintech credit is a significant driver of improved financial performance among MFIs, indicating its crucial role in enhancing service delivery and operational efficiency. Credit sharing and banking regulations also positively affect financial performance, though their impact is less pronounced compared to Fintech credit. In conclusion, while Fintech credit significantly enhances MFI performance, credit sharing and regulatory compliance also contribute positively but to a lesser extent. The study underscores the need for further research and the implementation of data-driven strategies and supportive regulatory frameworks to fully harness the benefits of Fintech innovations for the economically vulnerable populations in Kisumu City.