Effect of Organizational Culture and Staff Competence on the Implementation of Credit Scoring at Kenya Women Fund Trust
Keywords:
Organizational culture, Staff competence, Credit scoring, and Kenya Women Microfinance BankAbstract
Credit scoring is a scientific method of assessing the credit risk associated with new credit applications. The implementation of credit scoring programs/projects in a microfinance environment is difficult and has encountered poor implementation outcomes. Insufficient volume of micro finance applications encountered, does not allow most lenders to develop their own scorecards using their own data and thus many microfinance institutions do not track applications because of insufficient systems to develop an elaborate scoring process. The study sought to investigate the effect of organizational culture and staff competence on the implementation of credit scoring at Kenya Women Fund Trust (KWFT). The target population was over 1,500 Business Development Officers and Credit Risk Managers who were working at KWFT of which 125 respondents were selected using random sampling approach. Data was collected using the questionnaire and analyzed using descriptive statistic. Correlation analysis and a multiple linear regression analysis model was used to establish the relationship between organization culture, staff competences and the implementation of credit scoring. The study found that organizational culture, staff competence were positively and significantly related with and implementation of credit scoring. The study concluded that Organizational culture and Staff competence influenced the implementation of credit scoring at KWFT. The study recommended for an effective use of the organizational culture and staff capacity since they were helpful in guiding the design, implementation and management of the credit scoring system through its various development stages in a microfinance environment.
Keywords: Organizational culture, Staff competence, Credit scoring, and Kenya Women Microfinance Bank
References
Bartram, D. (2004). Assessment in Organizations. Applied Psychology: An International Review, 53(2), p. 237-259.
Frames, W.S, Padhi, M. &Lynn, W. (2001) The Effect of Credit Scoring on Small Business Lending in Low-and Moderate- Income Areas. [Working Paper 2001 -6]. Federal Reserve Bank of Atlanta.
Gakure, R.W., Ngugi, J.K., Ndwiga, P.M., & Waithaka, S.M. (2012). Effect of Credit Risk Management Techniques on the Performance of Unsecured Bank Loans Employed By Commercial Banks in Kenya. International Journal of Business and Social Research (IJBSR), 2(4), 221-236.
Kenya, F. S. D. (2008). The potential for credit scoring for SME lending in Kenya. Financial Sector Deepening (FSD) Publication.
Kombo, D.K. & Tromp, L.A. (2009). Proposal and Thesis Writing: An Introduction. Nairobi: Paulines Publications Africa.
Korir, M.K. (2012) Effects of Credit Risk Management Practices on Financial Performance of Deposit Taking Microfinance Institutions in Kenya (Master’s thesis). University of Nairobi, Kenya.
Kothari, C. (2004). Research Methodology: Methods & Techniques, 2nd edition. New age International Publishers, New Delhi, India.
Mitrani, A., Dalziel, M., & Fitt, D. (1992), Competency Based Human Resource Management. Hay Group.
Mutie, C.M. (2006). Credit Scoring Practices and Non-Performing Loan in the Kenyan Commercial Banks (Master’s thesis). University of Nairobi, Kenya.
Mwirigi, P.K. (2006). An Assessment of Credit Risk Management Techniques Adopted by Microfinance Institutions in Kenya (Master’s Thesis). University of Nairobi, Kenya.
Mwithi, S. (2012). Relationship between Credit Risk Management Practices and the Level of Non-Performing Loans of Microfinance Institutions in Nyeri County (Master’s thesis). University of Nairobi, Kenya.
Pagano, M. & Jappelli, T. (2002). Information sharing, Lending and Defaults: Cross country Evidence. Journal of Banking and Finance, 26(10), 2017-2045.
Samreen, A., Zaidi, F.B. & Sarwar, A. (2013). Design and development of credit scoring model for the commercial banks of Pakistan: Forecasting creditworthiness of individual borrowers. International Journal of Business and Commerce, 2(5), 1- 26.
Society for Human Resource Management. (2003). Competency Overview. http://www.Competencies%20Overview.htm.
