| dc.description.abstract | iii
ABSTRACT
Microfinance banks in Kenya play a critical role in providing financial services to low-
income individuals and small businesses, many of whom are underserved by traditional
financial institutions. However, like any financial institution, microfinance banks in Kenya
are also susceptible to fraud, which can have significant consequences for both the institution
and its clients. The main aim of this research study was to assess the effect of corporate
governance on fraud mitigation among microfinance banks in Kenya. The specific objectives
of the study were to; determine the effect of executive compensation on fraud mitigation,
analyse the effect of board independence on fraud mitigation, to establish the effect of
independent risk committee on fraud mitigation and to assess the effect of code of conduct
on fraud mitigation. The research adopted the agency theory, stakeholder theory and the
stewardship theory. A descriptive research design was used in this research. The target
population was the 349 management employees working at the 14 microfinance banks in
Kenya and stratified sampling technique was used. The employees were classified according
to their cadre. The sample size was 186 arrived at using Yamane formula. The study utilized
primary data that was collected using a questionnaire. The administration of the
questionnaire was done through Google form. The collected data was converted into
quantitative format and analysed using descriptive and inferential statistics. The descriptive
statistics involved mean and standard deviation while inferential statistics comprised of both
correlation and regression analysis. The results of the study were presented in tables and
figures followed with pertinent interpretation. Regression results revealed that executive
compensation, board independence, independent risk committee, and code of conduct
together account for 93.1% of the variation in the fraud mitigation among microfinance banks
in Kenya. The explanatory power of the model was statistically significant as the p value was
0.000. Further the results revealed that executive compensation (β = 0.312, p = 0.000); board
independence (β = 0.352, p = 0.000); independent risk committee (β = 0.232, p = 0.000); and
code of conduct (β = 0.732, p = 0.000) had a positive and significant effect on fraud
mitigation among microfinance banks in Kenya. Based on the findings, the study concluded
that effective corporate governance, manifested through equitable executive compensation,
autonomous and diverse boards, proficient and independent risk committees, and robust
codes of conduct, substantially contributes to fraud mitigation in microfinance banks. The
recommendations emphasize the refinement of corporate governance structures and
practices, continuous monitoring and evaluation of governance policies, and the integration
of advanced technological solutions to enhance fraud detection and prevention capabilities.
Future research is encouraged to explore the intricate relationships between different
corporate governance components and their collective impact on fraud mitigation, with a
focus on uncovering universally applicable insights and practices in varied organizational
and geographical contexts. | en_US |
