摘要：Household loans remain the engine to productivity and economic growth globally. Non-prime household loan is essential,because it enables the borrowers with no collateral to access credit from Microfinance Banks. The survival andsustainability of non-prime household loans globally is therefore significant. Credit risk however remains the maindeterrent of the soundness of Microfinance Banks. This leads to the poor performance of microfinance institutions inmany economies in the world. Several countries globally are making inroad in reducing the credit risks, which lead tothe poor performance of Microfinance Banks. It is still unknown why the credit risk affects the performance of non-primehousehold loans in the Microfinance Banks domiciled in Kenya. The reason for conducting this study is to determine thelevel at which the third party loan guarantee and the performance of non-prime household loans relate to the MicrofinanceBanks in Kenya. Particularly, this study is to determine how the amount secured by guarantee, recoveries fromguarantors, percentage of loan secured, and percentage recoveries from guarantors relate to the performance of nonprimehousehold loans in the Microfinance Banks in Kenya. The population was 516 senior management employeesof the banks. The researcher conducted a multiple regression analysis for determining the relationship between theamount secured by guarantee—recoveries from guarantors, percentage granted, and percentage recoveries—and theperformance of non-prime household loans. The R and R2 were used for determining the strength of the relationshipand the coefficient of determination at 0.05 level of significance of variables. The result of this study reveals that thereexists a strong relationship between the dependent and independent variables, thereby contradicting the null hypothesis,which states that the relationship does not exist. The percentage of the recoveries from the guarantors over thetotal recoveries did not have a strong relationship and was not significant. This study recommends the enhancement ofthe loan guarantee processes to reduce high loan default geared toward good performance of this loan so that it can beaccessible to many people.
