CREDIT MANAGEMENT PRACTICES AND ASSET QUALITY OF MICROFINANCE INSTITUTIONS IN MALAWI.

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dc.contributor.authorSR. GLORIA TENTHANI
dc.date.accessioned2026-03-31T11:10:06Z
dc.date.available2026-03-31T11:10:06Z
dc.date.issued2025-09
dc.descriptionThesis
dc.description.abstractMicrofinance institutions (MFIs) play a significant role in the provision of financial services to excluded members of society by providing loans (small loans), savings, and insurance to the excluded populations. By improving financial inclusion, MFIs play a significant role in driving economic activity and enhancing the lives of people who are not afforded the privilege of mainstream banking. In spite of this, MFIs face the challenge of non-performing loans, high defaults and low repayment levels of the same in terms of credit lines advanced by them. This has been the case against the MFIs, thereby impeding asset quality maintenance. The current research concerned itself with the impact of credit management practices on the quality of the asset in microfinance institutions in Malawi. The particular research question was to analyse how credit policy, client credit appraisal, credit terms and credit risk control affect the quality of the asset in the MFIs in Malawi. The hypotheses used in the research were the asymmetric information hypothesis, behavioural finance hypothesis, contract hypothesis and credit risk hypothesis. The study used the descriptive cross-sectional research design to correlate relationships among the variables. The sample was a population consisting of 107 MFIs in Malawi. The method of simple random sampling was employed to get a sample size of 84 MFIs. The primary data were obtained through the use of questionnaires, and the secondary data were collected using a data collection form that was used to obtain publicly published financial statements of all MFIs in Malawi. Information was summarized with the help of various statistics. The descriptive statistics included the frequencies, the average, the standard deviation and the percentage. The regression analysis and other inferential statistics were used to study the relationship between the credit management practices and the quality of the asset in MFIs in Malawi. Based on the study findings, it was observed that all four credit management practices included in the study significantly affected the quality of the asset. The findings indicated that credit policy had a positive and significant effect on the quality of the asset (0.295, p = 0.003). In the same way, client credit appraisal showed a large and positive association with the quality of asset (beta = 0.410, p< 0.001). The credit terms also showed a positive, significant correlation with the quality of the asset (beta 0.222, p = 0.014), and, finally, the credit risk control also showed a positive, significant correlation with the quality of the asset (beta 0.263, p = 0.007). The study concluded that standardised and uniform credit management procedures are central to the strength in recovering asset quality and the viability of microfinance institutions in Malawi. It is the recommendation of the study that credit management practices in Malawi should be standardised and enforced in all the microfinance institutions to boost repayment, to safeguard asset quality and support financial sustainability. Policymakers should encourage the concept of responsible lending and consumer protection by implementing more effective credit policies and risk management measures.
dc.identifier.urihttps://repository.cuea.edu/handle/123456789/628
dc.language.isoen_US
dc.publisherTHE CATHOLIC UNIVERSITY OF EASTERN AFRICA
dc.subjectCredit management practices
dc.subjectasset quality
dc.subjectmicrofinance institutions
dc.subjectloan portfolio management
dc.subjectnon-performing loans
dc.subjectfinancial performance
dc.subjectMalawi
dc.titleCREDIT MANAGEMENT PRACTICES AND ASSET QUALITY OF MICROFINANCE INSTITUTIONS IN MALAWI.
dc.typeThesis

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