Financial Innovation and Performance

This study focused on financial innovation, defined as the process by which microfinance institutions offered novel approaches to the production of commodities and services. Different types of innovation included marketing, product, location, and research and development innovations. Financial innovations encompassed process, institutional, and product innovations. The purpose of the study was to investigate how institutional, product, and process innovations affected the performance of microfinance institutions in Nairobi County. Since growth and performance are linked, the study aimed to ascertain if the county's microfinance banks operated in a sufficiently innovative manner. The theoretical framework incorporated innovation diffusion theory, transaction cost innovation theory, and financial intermediation theories. The study employed a descriptive survey research approach to gather data from participants employed by microfinance institutions located in Nairobi County, Kenya. Primary data was analyzed using SPSS Version 17.