Abstract:
The study looked into how staff competencies affect loan recovery at deposit-taking
microfinance firms in Nakuru County, Kenya. Microfinance institutions have evolved
into self-sustaining financial organizations that provide credit for a fee and profit.
Despite efforts to prevent loan defaults, MFIs are experiencing an increase in loan
defaults. The study employed two theories: knowledge asymmetry and delegated
borrower monitoring. The findings revealed that staff competencies had a substantial
impact on credit recovery among MFIs. MFI management should guarantee that the
crediting team has enough capacity to detect and prevent bad debt and that adverse
debt reports are addressed promptly. Management and staff should inform clients
about the repercussions of loan default, as bad debts lead to institutional failure.
