Abstract:
The purpose of this study was to establish factors that influence the social performance of microfinance
institutions with a specific focus on governance mechanisms. The study used an explanatory and
descriptive research design on sample of 38 out of a population of 55 microfinance institutions MFIs
with the respondents being the Chief Executive officer, Operations manager, a branch manager and a
credit officer in each of them. Triangulation of data was applied in order to capture most aspects of the
study variables. Results indicated that board characteristics were an important determinant of an MFI’s
social performance. The study recommends improvement on governance through adherence to various
corporate governance guidelines and practices. Similarly, leadership characteristics directly and
positively influenced social performance hence the recommendation to have more experience CEOs as
well as separation of roles of board chairman and the CEO. Stakeholder involvement improved the
social performance for MFIs especially in cases where donor and clients were represented in the board.
Accountability practices of MFIs were however found not to have significant influence their social
performance. The study thus recommended adoption by the industry of mandatory reporting
requirements on the Social Performance. The study identifies best practices in the board characteristics,
leadership characteristics and the involvement of stakeholders in the MFIs board as the key policy
consideration areas in addressing the social performance of MFIs in Kenya. Additionally, the study thus
highlights areas for further research around the key dimensions of SPI score, effect of regulation on SPI
and the effect of leadership style on the social performance of MFIs. The research findings will be
important for MFIs and industry stakeholder keen on implementing Social performance management
