The study aimed to assess the financial factors (viz. financial literacy and interest rates influence) affecting the growth of microfinance institutions (MFIs) in Bahati Sub-county, Kenya. The study was guided by stage theories of growth, models of organizational capabilities, and Greigner's growth model. The study adopted descriptive research design. The study targeted all the 117 employees working with the 20 MFIs in Bahati Sub-county. A sample of 54 respondents was drawn using stratified

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... om sampling. Data collected through structured questionnaire was analyzed using SPSS employed descriptive and inferential statistics. It was established that most of employees working with MFIs had been trained on matters of finances. It was noted that MFIs generally charge higher interest rates than commercial banks. The study findings indicated that there exists a strong, positive and statistically significant relationship between financial literacy and growth of MFIs; whereas relationship between interest rates and growth of MFIs was not statistically significant. The study found that MFIs charge higher interest rates than commercial banks. The study recommends that MFIs should continuously enlighten their employees on financial matters and MFIs should ensure that there is no huge disparity between the interest rates they charge and those ones charged by other lending institutions.