INFLUENCE OF COMPETITIVE AGGRESSIVENESS ON THE GROWTH OF MICROFINANCE INSTITUTIONS IN MURANG’A COUNTY, KENYA

Abstract

This study investigates the impact of competitive aggressiveness on the growth of microfinance institutions (MFIs) in Murang'a County, Kenya. In the dynamic landscape of the financial sector, MFIs face increasing pressure to compete effectively while sustaining growth. Competitive aggressiveness, characterized by strategies aimed at directly challenging competitors, introducing innovative products, and expanding market presence, has gained prominence as a potential driver of growth in this context. To examine this relationship, the research employs a mixed-methods approach, combining quantitative analysis of financial data with qualitative insights from key stakeholders in the microfinance sector. The study analyses financial performance indicators, including loan portfolio growth, outreach, profitability, and market share, over a five-year period. Additionally, in-depth interviews and surveys are conducted with microfinance practitioners, regulators, and clients to gain a comprehensive understanding of the competitive dynamics in Murang'a County. Preliminary findings suggest a strong correlation between competitive aggressiveness and the growth of MFIs. Institutions that proactively engage in competitive strategies tend to experience higher loan portfolio growth, increased outreach to underserved populations, improved profitability, and an expanded market presence. However, the study also highlights the need for balanced approaches, as excessive aggression can lead to risks and challenges in regulatory compliance and client protection. The research outcomes have significant implications for both practitioners and policymakers in the microfinance sector. By shedding light on the nuanced relationship between competitive aggressiveness and growth, this study offers valuable insights for MFIs seeking to thrive in competitive environments while maintaining financial stability and social impact. Additionally, regulators and industry stakeholders can use the findings to refine policies and frameworks that encourage healthy competition and sustainable growth in the microfinance sector.