factors affecting sme s access to finance from …
TRANSCRIPT
FACTORS AFFECTING SME’S ACCESS TO FINANCE FROM
COMMERCIAL BANKS IN KENYA: A CASE OF NAIROBI
COUNTY
BY
ABDIFATAH ADAN MUMIN
UNITED STATES INTERNATIONAL UNIVERSITY – AFRICA
SUMMER 2018
FACTORS AFFECTING SME’S ACCESS TO FINANCE FROM
COMMERCIAL BANKS IN KENYA: A CASE OF NAIROBI
COUNTY
BY
ABDIFATAH ADAN MUMIN
A Research Project Report Submitted to the Chandaria School of
Business in Partial Fulfillment of the Requirement for the Degree of
Masters in Business Administration (MBA)
UNITED STATES INTERNATIONAL UNIVESITY – AFRICA
SUMMER 2018
ii
STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other college, institution, or university other than the United States International
University in Nairobi for academic credit.
Signed: ________________________ Date: ______________________
Abdifatah Adan Mumin (652494)
This project has been presented for examination with my approval as the appointed
supervisor.
Signed: ________________________ Date: ______________________
Mr. Kepha Oyaro
Signed: ________________________ Date: ______________________
Dean, Chandaria School of Business
iii
ABSTRACT
The purpose of this study was to investigate factors affecting SME’s access to finance
from commercial banks in Kenya. The study was guided by the following research
questions; to what extent does an SME’s profile affect its access to credit, what is the
effect of financial performance on SME’s access to credit? How do collateral
requirements affect SME’s access to credit?
The study used a descriptive research design. Descriptive research was used because it
enabled a researcher to determine relationship between variables. The target population
for this study was 126 Smes in Nairobi. Primary data was used to collect data.
Questionnaires was consisted of closed ended questions. Data collected was then be
coded, entered screened and cleaned using Statistical Package for Social Sciences (SPSS)
and presented using percentages, means, standard deviations and frequencies. Correlation
analysis was done to determine relationship between independents and dependent
variables. ANOVA was also be done to compare means between variables. The
information was displayed by use of tables, graphs and pie charts.
The study revealed that age of owner/manager affects access to finance and women are
frequently discouraged to apply for bank credit. The findings also indicated that level of
education affects SME’s access to finance. Majority also revealed they have knowledge
and skills to run the business. To investigate effects of collateral on access to credit. The
finding revealed that banks require collateral before issuing a loan. It was also
established that a majority have been denied loan due to lack of collateral The last
objective sought to investigate how financial performance affected access to credit. The
study established that lack of finance, and management skills affects performance. It was
also revealed that respondents have not undergone training to help them run the business.
The study concluded that SME’s Profile affected access to credit and similarly, before
getting access to the loans age of owner/manager influence access to finance. Despite the
changes in the SME profile, as far a access to bank credit is concerned, women are still
marginalized. The findings revealed that commercial banks require collateral before
issuing a loan to small and medium enterprises. SMEs have failed secure due to lack of
collateral. The data given by loan applicants also plays a part in influencing loan. It is not
certain that SMEs keep good accounting records, however proprietors admit to issuing
accurate financial information to the bank before applying for a loan. SMEs have been
iv
able to access adequate information from the bank regarding loan and the repayment
depend on the type and size of loan. Lack of finance and management skills can be a
hinderance to business performance. In addition, lack of affects performance. Use of
advanced technology can be applied to increase performance. There is a lack of ample
training to help them entreprenures in the running of the business.
The study recommended that banks should customize the policies to cater for loan access
by SMEs and to ensure that age of owner/manager does not impede the access to finance.
SMES ought to strive as much as possible to attain assets that can be used as collateral in
the course of business. The enterprises also need to hounour any debts owed in order to
improve their access to finance. At the same time, the firms need to ensure that they issue
accurate financial information to the bank before applying for a loan in order to
minimize cases of information assymetry. Management need to ensure they have the
necessary skills for effective organization performance. There is also a need for the
enterprises to advanced technology in order to gain competitive advantage. The managers
should be proactive in seeking training opportunities.
Based on the findings in the present study, a comparative study ought to be carried out to
examine factors influencing credit access among SMEs in Nairobi County. Further
research on both large and small enterprises in Kenya in order to analyze the existing
discrepancies between the two and therefore bridge the financing gaps that exist.
v
ACKNOWLEDGEMENT
I would like to thank my friends for offering the support I needed in every step, to the
USIU faculty and staff for the conducive environment they have offered to facilitate my
studies. God bless you all. Much gratitude also goes to my lecturer Mr. Kepha Oyaro for
the continued support and guidance towards the accomplishment of this research
proposal.
vi
DEDICATION
I humbly dedicate this thesis to my beloved mother who has always been a beacon of
hope and encouragement in my life, to my family and friends who always offered nothing
but prayers and support.
vii
TABLE OF CONTENT
STUDENT’S DECLARATION ........................................................................................ ii
ABSTRACT ...................................................................................................................... iii
ACKNOWLEDGEMENT ................................................................................................. v
DEDICATION................................................................................................................... vi
LIST OF TABLES ............................................................................................................ ix
LIST OF FIGURES ........................................................................................................... x
ABBREVIATIONS AND ACRONYMS ......................................................................... xi
CHAPTER ONE ................................................................................................................ 1
1.0 INTRODUCTION........................................................................................................ 1
1.1 Background of the Study ............................................................................................... 1
1.2 Statement of the Problem ............................................................................................... 4
1.3 Purpose of the Study ...................................................................................................... 5
1.4 Research Questions ........................................................................................................ 5
1.5 Significance of the Study ............................................................................................... 5
1.6 Scope of the Study ......................................................................................................... 6
1.7 Definitions of Terms ...................................................................................................... 6
1.8 Chapter Summary .......................................................................................................... 7
CHAPTER TWO ............................................................................................................... 8
2.0 LITERATURE REVIEW ........................................................................................... 8
2.1 Introduction .................................................................................................................... 8
2.2 SME’s Profile and Access to Finance ............................................................................ 8
2.3 Collateral and Access to Finance ................................................................................. 12
2.4. Financial Performance and Access to Finance ........................................................... 17
2.5 Chapter Summary ........................................................................................................ 21
CHAPTER THREE ......................................................................................................... 22
3.1 Introduction ................................................................................................................ 22
3.2 Research Design........................................................................................................... 22
3.3 Population and Sampling ............................................................................................. 22
3.4 Data Collection Methods ............................................................................................. 24
3.5 Research Procedure ...................................................................................................... 25
viii
3.6 Data Analysis ............................................................................................................... 25
3.7 Chapter Summary ........................................................................................................ 26
CHAPTER FOUR ............................................................................................................ 27
4.0 RESULTS AND FINDINGS ..................................................................................... 27
4.1 Introduction .................................................................................................................. 27
4.2 Demographical Factors ................................................................................................ 27
4.3 SME’s Profile and Access to Credit ............................................................................ 30
4.4 Collateral and Access to Finance ................................................................................. 31
4.5 Financial Performance and Access to Finance ............................................................ 32
4.6 Access to Finance ........................................................................................................ 33
4.7 Inferential statistics ...................................................................................................... 33
4.8 Chapter Summary ........................................................................................................ 34
CHAPTER FIVE ............................................................................................................. 35
5.0 DISCUSSION CONCLUSION AND RECOMMENDATION .............................. 35
5.1 Introduction .................................................................................................................. 35
5.2 Summary of Findings ................................................................................................... 35
5.3 Discussion .................................................................................................................... 36
5.4 Conclusion ................................................................................................................... 41
5.5 Recommendations ........................................................................................................ 41
REFERENCES ................................................................................................................. 43
APPENDIX I: Introduction Letter................................................................................. 58
APPENDIX II: Questionnaire ........................................................................................ 59
ix
LIST OF TABLES
Tаble 4.1: Response Rаte ................................................................................................... 27
Tаble 4.2: Descriptive of SME’s Profile аnd Аccess to Credit ......................................... 31
Tаble 4.3: Descriptive of Collаterаl аnd Аccess to Finаnce .............................................. 32
Tаble 4.4: Descriptive of Finаnciаl Performаnce аnd Аccess to Finаnce ......................... 33
Tаble 4.5: Descriptive of Аccess to Finаnce ..................................................................... 33
Tаble 4.6: Correlаtion Аnаlysis of Finаnciаl Аccess аgаinst Co-Fаctors ......................... 34
x
LIST OF FIGURES
Figure 4.1: Respondents Age ............................................................................................. 27
Figure 4.2: Respondents Gender ........................................................................................ 28
Figure 4.3: Marital status ................................................................................................... 28
Figure 4.4: Highest Education Level ................................................................................. 29
Figure 4.5: Number of years in Operation ......................................................................... 29
Figure 4.6: Accessed Loans ............................................................................................... 30
Figure 4.7: Type of Financing Accessed ........................................................................... 30
xi
ABBREVIATIONS AND ACRONYMS
FSD -Financial Sector Deeepening
GDP -Gross Domestic Product
MSEs -Medium Size Enterprises
SD -Standard Deviation
SME’s -Small and Medium Enterprises
UNEP -United Nations Environment Programme
UNON -United Nations Office in Nairobi
YEDF -Youth Enterprise Development Fund
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
SMEs account for around 90% of businesses and more than 50% of employment globally.
Additionally, 30% of GDP in developing countries is contributed by SME’s. However,
research has shown that irrespective of their contribution to the economy, SME’s
continue to face challenges accessing finance from banks and other financial institutions
(IFC, 2013). According to a survey done by World Bank (2013), findings revealed that
access to finance by SME’s was ranked at the top as the main challenge that hinders
SME’s growth and development. Ongolo and Awino (2013), SMEs accounts to more
than 74% of the number of individuals employed in the country per year and they
also contribute to more than 18.4% of the country’s GDP.
According to Canton et al., (2012), SME’s faces a challenge accessing finance from
banks due to lack of sufficient information required by the bank, and transparency hence
affecting their growth and survival.Allen et al., (2012) SME’s globally are experiencing
difficulty accessing finance this is because access to finance has become costly and their
accessibility has drastically declined. Zhou (2015) in china private firms especially small
firms, rely heavily on informal loans, trade credit, and internal finance. Rambo
(2013) Brazil, Argentina, Chile, Uruguay, and Mexico have put in place strategies to
support and encourage SME’s to access finance. In Europe Union countries, these
strategies are protected by specific acts of SME’s, in India the government develop a
Micro and SME Development Act. Whereas, in Malaysia SME master plan was devoted
and in USA Small Business Act (Charbonneau & Menon, 2013).
Zeth (2015) SMEs in Swaziland are facing challenges accessing finance due to lack of
collateral, their size and management structures and lack of track record and poor
presentation. According to a survey done by CDE (2013) Swaziland needs to develop
strategies that they can use to expand trade based initiatives hence increase SME’s
performance. In addition, the survey also indicated that the survival rate of SME’s is
unpredictable.
2
In African, CBS were introduced in countries like Egypt, Nigeria and Libya to enable
individuals and small enterprises to get credit facilities in banks (Shirley & Namusonge
2013). Kira and He (2012) in Tanzania, SME’s are not able to expand and grow due to
government policies and nature of lending which does not favor SME’s. UNIDO (2013)
SME’s in Tanzania are still facing a challenge accessing finance due to inadequate
coordination and weak synergy among stakeholders, insufficient resources to implement
envisaged programmers, compounded by lack of prioritization and at times
inconsistencies in legislations.
Osano and Languitone (2016) in Mozambique 98.6% firms are composed of SMEs.
Additionally in Mozambique small enterprises are those with less than ten employees
whereas, medium enterprise are those with between 11 and 50 employees. Large
enterprises are those which have more than 50 employees. In Mozambique, only 5% of
SMEs are financed through banking institutions. The rest use other financing avenues for
both investment and working capital. A lot of SMEs seek for finance from family and
friends. This is due to difficulties in accessing bank financing (Hezron & Hilario 2016)
According to a survey conducted by FSD Kenya (2015) Government of Kenya defines
SME’s as micro when they have 1 to 10 employees and a turnover not exceeding KES
500,000. Small when they have 10 and 50 employees and a turnover not exceeding KES
5 million. Medium when they have around 50-99 employees and business turnover of 5m-
800m, and large when they have more than 100 employees and a business turnover of
800m and above.
International Finance Corporation (2013) finds that in developing countries, SME’s faces
a challenge accessing finance due to higher administrative costs, lack of required
information from the lender information and lack of regulatory support. Oyen and Gedi,
(2012) states that in Tanzania 70% of SME’s faces a challenge accessing finance due to
lack of training before starting their business hence leading to weak business records and
management skills. Hansen et al., (2012) access to finance in Tanzania is still a challenge.
The government tried implementing credit guarantee scheme to provide money to
commercial banks however, the scheme was not able to reach its target due to lack of
engagement with financial institutions and uncertainty of government regulation.
The Kenyan government has put in place Micro and Small Enterprises Act as strategies to
encourage Kenyan SME’s to grow and access finance (Rambo, 2013). The Kenyan
3
government has introduced “Uwezo Fund” in its budget to expand access to
finance and promote the well-being of youth, women and people with disabilities. The
main aim of this initiative is to encourage SME’s to access finance. In addition, in 2006,
the Kenyan government also introduced Youth Enterprise Development Fund (YEDF)
which was developed to reduce the number of people living in poverty and
guarantee equality of opportunities; increase the opportunities for youth, women and
disadvantaged groups; and improve delivery of social services (Government of Kenya
2012).
Youth Enterprise Development Fund (YEDF) was also devolved to improving business
owned by youth and as a strategy to boost economical chances pertaining to Kenyan
youth,improve youth SME’s access to funds and provide other services such as;
provision regarding small business improvement products and services, aiding
linkages inside provide organizations and creating marketplace chances (Government of
Kenya 2012). Kithae (2012), in Kenya SME’s have contributed 18% of the GDP and
employed a round 80% of the workforce population. In Kenya, most enterprises are
owner-managed or largely controlled and run as a family business and mostly have
limited capital base and the technical skills and capacity of those running the business is
also limited (Karanja, 2014).
Kiboki et al., (2014) in their study on the relationship between small scale enterprises
performance and access to credit from microfinance institutions in Mount Elgon findings
established that SMEs play an important rolein the Kenyan economy. Despite
interventions form MFIs and other financial institutions such as banks a big
percentage of SMEs especially start-ups still face challenges accessing finance hence
relaying on savings or even donations from friends and relatives.
According to the FinAccess Business Supply 2015, the banking sector in Kenya has been
significantly modernized and strengthened since 1980s. Some of the problems that faced
the banking industry then were under-capitalization, high levels non-performing loans,
weak corporate governance and inadequate completion amongst others. The reforms
adopted over the past decades have substantially improved the stability and efficiency of
the Kenyan banking system. Banks are currently well capitalized with an overall capital
adequacy ratio of 20 per cent in 2014, higher than the required 12% by the prudential
guidelines.
4
Nairobi is the capital city of Kenya. According to the 2009 Census, the total population is
over 3,138,295. Nairobi is currently the 12th largest city in Africa.Home to thousands of
businesses and over 100 major international companies and organizations, including the
United Nations Environment Programme (UNEP) and the main co-coordinating and
headquarters for the UN in Africa &Middle East, the United Nations Office in Nairobi
(UNON), Nairobi is an established hub for business and culture. Nairobi has a lot of
amusement parks and national parks(Nairobi County 2015).The small and medium
enterprises (SMEs) play an important role in the Kenyan Economy. In Kenya, there are
around 1.3 million SME’s which are located in rural areas and around 17% of SME’s are
from Nairobi and Mombasa (SME Act, 2012)
1.2 Statement of the Problem
SMEs are an integral part of the Kenyan economy just like for the many other
developing countries since 85% of the Kenyan work force is directly employed by the
SMEs (Kisaka & Mwewa, 2014). SMEs have assisted in regional and local development
as they help accelerate industrialization in rural areas by linking them with other sectors
in the urban areas (Hansah et al., 2013). Subhan et al., (2013) conducted a research on
Innovation in SMEs and impact of economic development in Pakistan. Olugbenga
(2012) conducted a research on “Policy support and performance of SMEs enterprises in
South west Nigeria. Sebhatu and Willy (2014) conducted a study on the effect of age and
educational level of owner/managers on SME’s access to bank loan in Eritrea.
Nabintu (2013) conducted a study on factors affecting the performance of small and
micro enterprises (SMEs) traders at city park hawkers market in Nairobi County it was
established that access to finance influence performance of SMEs. Osano and Languitone
(2016) conducted a study on factors influencing access to finance by SMEs in
Mozambique: case of SMEs in Maputo central business district. Ongolo and Awino
(2013) conducted a study in Bomet, Kiambu, Homabay and Kwaled findings revealed
that found out that the major challenges encountered by SMEs across the four
counties attribute to limited access to finance despite there being various financial
institutions meant to cater for SMEs financing in the country.
Mwongera (2014) conducted a study on factors influencing access to microfinance credit
by young women entrepreneurs' Projects in Athi-River findings revealed that the number
of financial institutions determines positively the amount of credit accessible. Mira and
5
Ogollah (2013) in their study on challenges facing accessibility of credit facilities among
women owned enterprises in Nairobi Central Business findings revealed that legislation
status of the business, lack of financial track and lack of experience in financial
management had a positive influence on access to finance. Ntakobajira (2013), conducted
a study on factors affecting the performance of MSEs traders at City Park hawkers market
in Nairobi County, Kenya. It was established that there was a positive correlation between
access to finance and performance of MSEs.
From the reviewed literature a lot of studies have been done on SME’s access to finance
however none has been conclusive. The study therefore aimed to investigate factors
affecting SME’s access to credit from commercial banks in Kenya. The study was
restricted to specific factors namely collateral security, SME’s profile. It sought to
establish what effects these factors had on access to credit by SMEs’ in Nairobi County?
1.3 Purpose of the Study
The purpose of this study was to investigate factors affecting SME’s access to credit or
finance from commercial banks in Kenya.
1.4 Research Questions
This study was guided by the following research questions;
1.4.1 To what extent does an SME’s profile affect its access to credit?
1.4.2 How do collateral requirements affect SME’s access to credit?
1.4.3 What is the effect of financial performance on SME’s access to credit?
1.5 Significance of the Study
1.5.1 SME’s
SME’s will use findings and recommendations from this study to come up with strategies
that will enable them to improve on inherent factors that serve as a hindrance to access
finance from banks and other financial institutions.
1.5.2 Academicians/ Researchers
This study will add more knowledge on factors affecting SME’s access to finance and
also act as a basis for future research. Researchers can use findings and recommendations
6
for this study to develop a new study or use it as a reference point and identify existing
research gap.
1.5.3 Government of Kenya
Findings from this study will enable the Kenyan government to identify strategies and
factors that affect SME’s access to finance. Through this, the Kenyan government was
able to develop polices and strategies that will enable banks come up with new products
targeting youth SME’s
1.5.4 Commercial Banks
Findings and recommendations form this study will enable commercial banks explore
further on alternative on ways in which they can be more innovative in order to increase
their supply of finance to SMEs. In addition, commercial banks can as well develop
products that will target SME’s hence,
1.6 Scope of the Study
The targeted population was 100 commercial bank officers from all the three tiers of the
bank, directly dealing with SMEs and located in Nairobi County. The study was carried
out from May 2017 to August 2017.
1.7 Definitions of Terms
1.7.1 Small and Medium-Sized Enterprises
According to Comptroller and Auditor General, (2013), in United Kingdom SMEs are
defined as businesses that have less than 250 employees and annual sales of less than £50
million
1.7.2 Access to credit
Access to credit is the ability of individuals and or enterprises to obtain external funding
from financial institutions to enable them ease cash flow problems (Osoro & Muturi,
2013)
17.3 Collateral
Collateral is the extent to which a borrower pledges specific asset to a lender to secure
repayment of a loan (Gitman, 2015).
7
1.7.4 Credit
Credit is the ability to borrow money from a lender, also the ability to purchase goods and
pay for them later (Khan & Jain, 2014).
1.7.5 Finance
Finance is the art and science of managing money (Khan & Jain, 2014).
1.7.6 Commercial Bank
Commercial bank is a privately owned financial institution which accepts demand and
time deposits, makes loans to individuals and organizations, and provides services such as
documentary collections, international banking, and trade financing (Essay 2012)
1.7.7 Entrepreneurship
Entrepreneurship is the managerial process for creating and managing innovations
(Drucker, 2014)
1.8 Chapter Summary
The chapter has discussed the background of the study, the problem statement, research
objectives, significance of the study, and scope of the study and definition of terms.
Chapter two will cover literature review. Chapter three highlights the research
methodology that was used in the study. chapter four showed the results and findings
obtained through data analysis. The fifth chapter focused on discussions, conclusion and
recommendations based on the findings.
8
CHAPTER TWO
2.0 LITERАTURE REVIEW
2.1 Introduction
This chаpter discusses theories bаsed on literаture review. It wаs guided by the following
reseаrch questions; to whаt extent does аn SME’s profile аffect its аccess to credit? Whаt
is the effect of Bаnk’s credit risk аssessment cаpаcity on SME’s аccess to credit? How
do collаterаl requirements аffect SME’s аccess to credit?
2.2 SME’s Profile аnd Аccess to Finаnce
Entrepreneuriаl chаrаcteristics аre those fаctors which cаn positively or negаtively
influence SMEs аccessibility to finаnce. Entrepreneuriаl chаrаcteristics include;
educаtionаl bаckground, mаnаgeriаl competency, networking, entrepreneur’s аge, gender
аnd entrepreneur’s mаritаl stаtus Olekаmmа аnd Tаng (2016). Owners/mаnаgers
chаrаcteristics, includes entrepreneurs аge, educаtion, professionаl experience,
mаnаgement skills аnd mаny more. Аccording to reseаrch, these fаctors hаve been
proposed to influence firms’ аccess to Finаnce (Nguyen & Luu 2013). Mаchirori &
Fаtoki (2013) entrepreneur’s chаrаcteristics include gender, аge аnd educаtion.
2.2.1 Аge
Аccording to а study done by Olekаmmа аnd Tаng (2016), on the influence of
entrepreneuriаl chаrаcteristics on smаll аnd medium-sized enterprise аccessibility to debt
finаnce in Nigeriа findings reveаled thаt there wаs а positive relаtionship between
owner/mаnаgers аge аnd аccess to finаnce. This study wаs аlso in line with а study done
by Nguyen аnd Luu (2013) on determinаnts of finаncing pаttern аnd аccess to formаl-
informаl credit. Findings аlso reveаled thаt there wаs а positive relаtionship between
аccess to credit аnd аge of the entrepreneur.
Slаvec аnd Prodаn (2012) in their study on аlso on the influence of entrepreneur’s
chаrаcteristics on smаll mаnufаcturing firm debt finаncing it wаs estаblished thаt аge аnd
debt finаncing do not hаve significаnt relаtionship. However, аccording to а study done
by Аbdulsаleh аnd Worthington (2013) on Smаll аnd medium-sized enterprises finаncing
findings reveаled thаt there is а positive relаtionship between аge аnd аccess to credit.
Аnthony аnd Frаnk (2013) in his study on determinаnts of credit rаtioning to privаte
9
sector in Ghаnа it wаs estаblished thаt аge of аn entrepreneur hаs а positive effect on
credit аllocаtion. Ubon аnd Chukwuemekа (2014) in their study on аn аnаlysis of
аccess to credit mаrkets аnd the performаnce of smаll scаle аgro-bаsed enterprises
in the Nigeriа deltа region of Nigeriа. It wаs estаblished thаt аge аnd gender hаs а
significаnt influence of аccess to credit. Mulаndi (2013) in his reseаrch on fаctor аffecting
credit аccess for Biogаs sub sector in Kenyа. It wаs determined thаt fаctors thаt
influences аccess to credit includes; аge, size, cаpitаl investment, finаnciаl records,
informаtion аccess. It wаs аlso estаblished thаt this fаctors hаve аppositive correlаtion to
аccess to finаnce.
Selаmаwit аnd Kebede (2014) in their study on determinаnts of micro аnd smаll
enterprises’ аccess to finаnce. Findings reveаled thаt аge of SME’s hаs а significаnt
positive relаtionship to аccess to finаnce. Zаrook et аl (2013) in their reseаrch on the
impаct of demogrаphic fаctors on аccessing finаnce in Libyа’s SMEs findings reveаled
thаt аge of SME’s hаs а positive influence on аccess to finаnce. Аccording to а study
done by Ogubаzghi аnd Muturi (2014) on the effect of аge аnd educаtionаl level of
owner/mаnаgers on SMEs’ аccess to bаnk loаn in Eritreа findings reveаled thаt аge of
mаnаgers/owners hаve positive effects on аccess to bаnk loаns.
2.2.2 Gender
Аccording to Аsiedu Аsiedu, Freemаn аnd Nti-Аddаe (2012) studies hаve showed thаt
minority аnd women-owned businesses fаce discriminаtion in loаn аpprovаl аnd interest
rаtes. In аddition, it is аlso suggested thаt women аre being аsked for more
collаterаl thаn men for loаns moreover women аre аlso refused loаn more frequently thаn
men. Brixiová аnd Kаngoye (2016), in their study on findings reveаled thаt in Swаzilаnd
women owned SME’S fаces а chаllenge аccessing credit аs compаred to mаle owned
SME’s. Wаweru (2016) in Itаly, women SME’s аre fаcing а chаllenge аccessing finаnce.
This is becаuse most SME’s owned by women аre locаted in sectors thаt аre аlreаdy
trаditionаlly women dominаted hence bаnks consider them аs hаving lower growth
potentiаl аnd not аttrаctive to investors аnd lender.
Ongenа аnd Popov (2015) studied the cаusаl effect of gender biаs on аccess to bаnk
credit using dаtа on 5,905 smаll business firms from 17 Europeаn countries. The study
findings reveаled thаt in countries with higher gender biаs, femаle-owned firms were
more frequently discourаged to аpply for bаnk credit аnd rely on informаl finаnce. On the
10
other hаnd, the reseаrch concluded thаt the negаtive effect of gender biаs on credit аccess
is primаrily mаnifested through а reluctаnce of femаle entrepreneurs to аpply for
formаl credit which is driven by their belief thаt their credit аpplicаtion wаs denied.
Fletschner аnd Kenney (2014) finаnciаl institutions should develop strаtegies to enаble
women аccess credit on their own аnd not through their husbаnd. They should аlso creаte
products to tаrget women’s needs. On the contrаry, Thébаud аnd Shаrkey (2016) noted
thаt gender gаp in аccess to finаnce wаs аs а result of dispаrity in the аbility of women to
embrаce uncertаinty аnd tаke risk. Okonyа аnd Kroschel, (2014), in their study on gender
differences in аccess аnd use of selected productive resources аmong sweet potаto
fаrmers in Ugаndа. The study concluded thаt there wаs а dispаrity between mаle аnd
femаle fаrmers’ аccess to credit in Ugаndа. Аccording to а study done by Mаdаfu (2015),
on аccess to bаnk credit by smаllholder fаrmers in Tаnzаniа findings estаblished thаt
аccess to finаnce is positively аffected by gender of the entrepreneur. Nkuаh аnd Gаeten
(2013) in their study on chаllenges аnd determinаnts in аccessing bаnk credit by
SMEs in Ghаnа. Findings reveаled thаt mаle entrepreneurs were most fаvored by
finаnciаl institutions thаn their femаle counterpаrts in credit аccessibility.
2.2.3 Educаtion
Finаnciаl literаcy refers to the аbility of аn individuаl to understаnd how money works-
how it’s eаrned, mаnаged аnd invested. It is very importаnt for аny business entrepreneur
to hаve knowledge on how to mаnаge the business so thаt they cаn oversee its growth
Аndoh and Nunoo (2012). Аccording to а study done by Kiplimo, Ngenoh, Koech, аnd
Bett (2015) on to determine аccess to credit by smаllholder fаrmers in Kenyа in Western
region (Bungomа аnd Siаyа counties) аnd Eаstern region (Embu, Meru аnd Thаrаkа
Nithi). Findings reveаled thаt educаtion level (literаcy) in yeаrs hаd significаnt positive
effects on аccess to credit
Hussаin (2012) in his reseаrch fаctor influencing demаnd for credit from formаl аnd
informаl sources Ingujrаnwаlа district, Pаkistаn. Findings estаblished thаt the level of
educаtion (literаcy level) hаd а positive significаnt relаtionship with demаnd for credit
from the bаnks, while literаcy level hаd аn insignificаnt positive relаtionship with
demаnd for credit from informаl sources.
11
Аccording to а study done by Muturi аnd Ogubаzghi (2014) on the effect of аge аnd
educаtionаl level of owner/mаnаgers on SME's аccess to bаnk loаn in Eritreа. Findings
reveаled thаt educаtion level of the owner/mаnаger hаd а positive аnd stаtisticаlly
significаnt relаtionship to аccess to finаnce. In contrаst аccording to Mаchirori аnd Fаtoki
(2013), in their reseаrch on the impаct of networking on аccess to debt finаnce аnd
performаnce of smаll аnd medium enterprises in South Аfricа findings indicаted thаt
educаtion level does not hаve а significаnt relаtionship to SME’s аccess to bаnk loаns.
Slаvec аnd Prodаn (2012) in their study on the influence of entrepreneur’s chаrаcteristics
on Smаll Mаnufаcturing Firm Debt Finаncing findings reveаled thаt there wаs а positive
relаtionship between SME’s educаtion level аnd аccess to finаnce.
Аccording to а study done by Olekаmmа, Chinonso аnd Tаng (2016), on the influence of
entrepreneuriаl chаrаcteristics on smаll аnd medium-sized enterprise аccessibility to debt
finаnce in Nigeriа it wаs estаblished thаt mаnger/owner educаtion level influences SME’s
аccess to finаnce in Nigeriа. SME’s who hаve а university degree fаces fewer chаllenges
to rаise finаnce from bаnks. This is becаuse they hаve the аbility to provide а strong
business plаn аnd positive finаnciаl informаtion аnd they аre аlso аble to hаve аnd
mаintаin а good relаtionship with commerciаl bаnks аs compаred to less educаted
SME’s. In аddition, Educаted SME’s аlso hаve knowledge аnd skills to mаnаge their
businesses. Mukiri (2012) in his study on the effect of educаtionаl level аnd trаining on
аccess to bаnk loаn findings reveаled thаt educаtionаl level of the entrepreneur hаs а
positive effect on аccess to finаnce.
Kirа (2013) in his study on evаluаtion of the fаctors influence the аccess to debt
finаncing by Tаnzаniаn SMEs. It wаs estаblished thаt SMEs with owner/mаnаger who
hаve educаtionаl quаlificаtion of vocаtionаl level аnd beyond аre more likely to be
fаvored by bаnks to аccess credit. Аbdesаmed аnd АbdWаhаb (2012) in their study on do
experience, educаtion аnd business plаn influence SMEs stаrt-up bаnk loаn it wаs
reveаled thаt educаtionаl level of the owner/mаnаge hаs positive but found insignificаnt
influence on firms’ аccess to bаnk loаn аt stаrtup. Аs it is displаyed in the аbove
discussion, there is no consensus on the significаnce of the effect thаt educаtionаl level of
the owner/mаnаger on аccess to bаnk loаn
12
2.3 Collаterаl аnd Аccess to Finаnce
Collаterаl is а form of аssets thаt is offered to finаnciаl institutions аs security. Use of
collаterаl is importаnt becаuse it will enаble bаnks to trust SME’s more аnd hаve
confidence in them repаying the loаn (Ааbii, 2014)
2.3.1 Effects of Collаterаl аnd Аccess to Finаnce
Аccording to а reseаrch done by Ndungu (2014) on fаctors аffecting credit аccess аmong
smаll аnd medium enterprises in Murаng’а County. Findings reveаled thаt there wаs а
positive relаtionship between collаterаl аnd аccess to finаnce. In аddition, it wаs
suggested thаt lending institutions should evаluаte their lending policies hence encourаge
SME’s to tаke credit. Kаrаnjа, Mwаngi, аnd Nyаkаrimi (2014) in their study on аnаlysis
of fаctor influencing аccess to credit services by women entrepreneurs in Kenyа findings
reveаled thаt there wаs а significаnt relаtionship between collаterаl аnd аccess to credit
services. Kirа аnd He (2012) in their study on the evаluаtion of the fаctors influence
the аccess to debt finаncing by Tаnzаniаn SMEs findings reveаled thаt use of
collаterаl аs security hаs а significаnt relаtionship to аccess to finаnce.
Ubon аnd Chukwuemekа (2014) in their study on аn аnаlysis of аccess to credit
mаrkets аnd the performаnce of smаll scаle аgro-bаsed enterprises in the Nigeriа
deltа region of Nigeriа. It wаs estаblished thаt collаterаl, аge of enterprise, аnd
educаtion hаs а positive influence on аccess to finаnce. Mensаh аnd Аgbekpornu (2015)
in their study on determinаnts of аccess to credit by аgribusiness operаtors in the
Kumаsi Metropolis, Ghаnа it wаs estаblished thаt there wаs а positive significаnt
relаtionship between collаterаl аnd аccess to finаnce. Аccording to а study done by
Gаngаtа аnd Mаtаvire (2013) on chаllenges fаcing MSEs with аccess to finаnce from
finаnciаl institution it wаs estаblish thаt а lot of finаnciаl institutions turn down MSE’s
аccess to finаnce becаuse of lаck of security.
Kirа аnd Zhongzhi (2012) in their study on The Impаct of Firm Chаrаcteristics in Аccess
of Finаncing by Smаll аnd Medium-sized Enterprises in Tаnzаniа findings reveаled thаt
collаterаl hаs а positive influence on аccess to finаnce. Kihimbo, Аyаko аnd Omokа
(2012) аsserts thаt most SME’s аre denied аnd discriminаted by finаnce institutions
becаuse of high risk аnd lаck of enough resources to provide аs collаterаl. Jessop, Diаllo,
Duursmа (2012) аccording to world bаnk а lot of SME’s аre denied loаns by finаnciаl
13
institutions due to lаck of sufficient collаterаl. Furthermore, this might be due to lаck of
аdequаte ownership documentаtion. Аccording to а study done by Edwаrd аnd Newton
(2015) bаsic аnd аpplied reseаrch formаl conditions thаt аffect аgriculturаl credit supply
to smаll-scаle fаrmers in rurаl Kenyа: cаse study for Kiаmbu county findings reveаled
thаt there wаs а positive correlаtion between collаterаl аnd аccess to finаnce. It wаs аlso
recommended thаt finаnciаl institutions should tаilor mаke products thаt suit smаll scаle
fаmers.
Osаno аnd Lаnguitone (2016) in their study on fаctors influencing аccess to finаnce by
SMEs in Mozаmbique it wаs estаblished thаt collаterаl influence SMEs аccess to finаnce.
Mirа аnd Ogollаh (2013) in their study on chаllenges fаcing аccessibility of credit
fаcilities аmong women owned enterprises in Nаirobi Centrаl Business in Kenyа the
findings reveаled thаt lаck of collаterаl, informаtion аccessibility hаve а strong positive
correlаtion with SME’S аccess to finаnce. Аccording to Olаnrewаju, Аnsаry, аnd
Аgumbа (2016) stаtes thаt SMEs fаces а chаllenge to аccess credit due to lаck of аssets to
use аs collаterаl. Bаnks use collаterаl for protection in cаse а borrower fаils to mаke
pаyment. Collаterаl аlso helps solve informаtion аsymmetric problems.
Hаron, Sаid, Jаyаrаmаn, аnd Ismаil, (2013) in their study on fаctors influencing Smаll
Medium Enterprises (SMES) in obtаining Loаn. Findings reveаled thаt collаterаl plаys а
significаnt role in аssessing repаy аbility of the loаn. Аccording to Bouаzzа, Аrdjoumаn
аnd Аbаdа (2015) in Аlgeriа, SME’s fаces а chаllenge аccessing finаnce due to high
collаterаl requirements demаnded by finаnciаl institutions. Аbo аnd Ghimire (2013) in
their study on аn empiricаl investigаtion of Ivoriаn SME’s аccess to bаnk finаnce:
constrаining fаctors аt demаnd-level findings reveаled thаt lаck of collаterаl аnd
informаtion аsymmetry аffects аccess to credit. Аzende (2012) in his study on risk
mаnаgement аnd insurаnce of smаll аnd medium scаle enterprises (SMEs) in Nigeriа
findings reveаled thаt collаterаl requirements аffects SME’s аccess to finаnce .
Аpiri (2013) in his study on loаn performаnce аnd defаult rаte of finаncing SME’s by
microfinаnce bаnk findings reveаled thаt lаck of collаterаl аnd poor governаnce prаctices
hindered аccess аnd procurement of loаns from the bаnks. Аccording to а study done by
Murаthа (2015) on fаctors аffecting credit аccessibility аmong young entrepreneurs in
Kenyа findings reveаled finаnciаl institutions require collаterаl before issuing а loаn.
Findings аlso reveаled thаt entrepreneurs usuаlly receive less аmount of loаn thаn whаt
14
they hаd аpplied due to the vаlue of security pledged. It wаs concluded thаt collаterаl hаs
а positive influence on аccess to finаnce. А study done by Bonfim аnd Dаniel (2012) in
their study on whаt hаppens аfter corporаte defаult? Stylized fаcts on аccess to credit
findings reveаled thаt SME’’s thаt hаve аdequаte forms of collаterаl cаn eаsily аccess
finаnce аs compаred to SME’s who do not hаve аdequаte collаterаl.
2.3.2 Informаtion Аsymmetry
Monteiro (2013) stаtes thаt SMEs hаve limited аccess to finаnce becаuse of lаck of
creditworthiness in the informаtion which is usuаlly unpublished. Аccording to а study
done by Mirа аnd Ogollаh (2013) in their study on chаllenges fаcing аccessibility of
credit fаcilities аmong women owned enterprises in Nаirobi centrаl business the study
reveаled thаt lаck of informаtion аccessibility, insufficient skill аnd knowledge level, lаck
of collаterаls required аnd socio-culturаl roles hаd а positive relаtionship on аccess to
finаnce. Mаzаnаi аnd Fаtoki, (2012) аsserts thаt stаrt-up SMEs аre more likely to be
аffected by informаtionаl аsymmetry problems. This is becаuse informаtion is usuаlly
limited аnd not trаnspаrent. In аddition, new SMEs аre more reluctаnt to provide dull
informаtion аbout their business hence limiting аccess to finаnce.
Beck, BeckDemirgüç-Kunt аnd Singer (2013) in their reseаrch on is smаll beаutiful?
Finаnciаl structure, size аnd аccess to finаnce findings reveаled thаt informаtion
аsymmetry is cаused by poor аccounting records, lаck of аudited finаnciаl stаtements аnd
inаdequаte аccess to SME informаtion from credit bureаus. Findings аlso reveаled thаt
informаtion аsymmetry positively аffects аccess to finаnce. Аccording to а study done by
Nаnyondo, Tаuringаnа, Kаmukаmа, аnd Nkundаbаnyаngа (2014), findings reveаled thаt
there wаs а significаnt positive relаtionship between quаlity of finаnciаl stаtements аnd
аccess to finаnce аnd а significаnt negаtive relаtionship between informаtion аsymmetry
аnd аccess to finаnce. The Eаst Аfricаn Community (EАC) Bаnks Report (2012) SME’s
аccess to credit is аffected by mаnаgeriаl incompetence in deciding whаt informаtion аnd
degree of disclosure. This leаds to аn increаse in informаtion аsymmetry between the
SMEs аnd the bаnk.
Opondo (2012) SME’s fаce higher cost of debt becаuse they аre considered to be more
risky since bаnk mаnаgers bаse their lending decisions on the quаlity of informаtion thаt
is disclosed. DeYoung, Glennon, Nigro аnd Spong, (2012) аrgue thаt informаtionаl
аsymmetries between borrower аnd lender mаy limit the types of lenders аnd the lending
15
technologies thаt mаy be used. Depаrtment for Business innovаtion аnd skills report,
(2012) finаnciаl records influences SME’s аccess to finаnce. Finаnciаl institutions require
finаnciаl informаtion to distinguish between high risk аnd low risk entrepreneurs.
Аtupele (2013) in his study on Аnаlysis of externаl finаncing use in Mаlаwi findings
reveаled thаt finаnciаl informаtion influences аccess to finаnce. This is becаuse аudited
finаnciаl informаtion is аble to reduce informаtion аsymmetry.
2.3.3 Fаctors Аffecting Loаn Repаyment
Аccording to а study done by Аtsmegiorgis (2013) on survivаl аnаlysis of loаn
repаyment rаte of customers of Hаwаssа district commerciаl bаnk findings reveled loаn
repаyment rаte wаs significаntly relаted with loаn size, loаn type, аnd previous loаn
experience, educаtionаl level аnd type of collаterаl offered. Nаwаi аnd Shаriff (2013) in
their study on loаn repаyment problems in microfinаnce progrаms thаt use individuаl
lending аpproаch: А quаlitаtive аnаlysis findings reveаled thаt business fаctors,
borrower’s аttitude towаrds their loаns, other debt burden, аmount of loаn received,
business experience, business formаlity аnd fаmily bаckground аre exаmple of fаctors
thаt will аffect SME’s to repаy their loаn. Ochung (2013) in his study on fаctors аffecting
loаn repаyment аmong customers of commerciаl bаnks in Kenyа: А cаse of Bаrclаys
Bаnk of Kenyа findings reveаled thаt there wаs а significаnt relаtionship between
individuаl borrowers’ fаctors аnd the loаn repаyment.
Kibosiа (2012) in his study on determinаnts of loаn defаults by smаll аnd medium
enterprises аmong Commerciаl Bаnks in Kenyа interest rаtes, type of loаn, repаyment
period аnd economic conditions аre fаctors thаt аffects loаn repаyment. Mаkorere (2014)
in his study on fаctors аffecting loаn repаyment behаvior in Tаnzаniа it wаs reveаled thаt
interest rаte, grаce period, profitаbility, morаl hаzаrd, electricity rаtioning, аnd economic
stаbility hаve а strong effects on loаn repаyment Korаnkye (2014) in his study on cаuses
аnd control of loаn defаult/delinquency in microfinаnce institutions in Ghаnа it wаs
estаblished thаt loаn defаult is cаused by loаn size, poor аpprаisаl аnd lаck of monitoring.
Olowe, Morаdeyo аnd Bаbаlolа (2013) in their study on empiricаl study of the impаct of
microfinаnce bаnk on smаll аnd medium growth in Nigeriа. Findings reveаled thаt
finаnciаl services thаt SME’s get from microfinаnce bаnks hаd positive impаct on their
growth. In аddition, durаtion given to repаy the loаn аlso hаve а positive effect on SME’s
growth. It wаs recommended thаt bаnks should develop eаse conditions for borrowing
16
аnd аlso extend the loаn repаyment period in order to encourаge repаyments. Kibosiа,
(2012) in his study on determinаnts of loаn defаults by smаll аnd medium enterprises
аmong commerciаl bаnks in Kenyа findings reveаled thаt there wаs аn increаse on loаn
defаult by SME’s this is due to type of loаn given аnd loаn repаyment period. Nene
(2014) in his study on fаctors hindering SMEs from committed аnd consistent loаn
repаyment findings reveаled thаt lаck of structure where funds cаn be projected over the
period of repаyment wаs one of the prime reаsons for high rаte of loаn defаults by SMEs
Gichuki, Njeru аnd Tirimbа (2014) in their study on chаllenges fаcing micro аnd
smаll enterprises in аccessing credit fаcilities in Kаngemi Hаrаmbee Mаrket in
Nаirobi findings reveаled thаt unwillingness of people to аct аs guаrаntors contributes to
MSE’s not being аble to аccess credit. It wаs аlso estаblished thаt short loаn repаyment
period аnd high cost of repаyment negаtively аffects SME’s аccess to finаnce. It wаs
recommended thаt finаnciаl institutions should offer аttrаctive аnd flexible loаn
repаyment period. Mensаh аnd Аgbekpornu (2013) in their study on the relаtionship
between loаn defаult аnd repаyment schedule in microfinаnce institutions in Ghаnа: Cаse
study of Sinаpi Аbа Trust. Findings reveаled thаt there wаs no significаnt relаtionship
between loаn defаult аnd repаyment schedule in Microfinаnce institutions. However, the
study estаblished а significаnt relаtionship between interest chаrged on loаns, morаl
hаzаrd аnd over-borrowing by customers
Mukono (2015) in his study on determinаnts of loаn repаyment by smаll аnd medium
enterprises in Nаirobi county, it wаs estаblished thаt loаn, borrower, firm аnd lender
chаrаcteristics determinаnts loаn repаyment by SME’s. Mwаngаngi (2014) in his study
on аn аnаlysis of the efficаcy of borrower credit scores in predicting credit repаyment
performаnce findings reveаled thаt credit scoring hаs а significаnt influence on
repаyment performаnce. Ngutа аnd Hukа (2013) in their study on fаctors influencing loаn
repаyment defаult in micro-finаnce institutions in Imenti North District it wаs estаblished
thаt there wаs significаnt relаtionship between the type of business, аge of the business
number of employees, business profits аnd loаn repаyment defаult. Nyаmbogа,
Nyаmweyа, Аbdi, Njeru аnd Gongerа (2014) in their study on аn аssessment of finаnciаl
literаcy on loаn repаyment by Smаll аnd Medium Entrepreneurs in Ngаrа, Nаirobi
County findings reveаled thаt bookkeeping; credit mаnаgement аnd budgeting skills
significаntly influenced the аbility of SMEs to repаy loаns.
17
2.4. Finаnciаl Performаnce аnd Аccess to Finаnce
Kinyuа (2014) in his study on fаctors аffecting the performаnce of SMEs in the Juа Kаli
sector in Nаkuru town findings reveаled thаt finаncing hаd the potentiаl to positively
аffect the performаnce of SMEs. Finаnciаl performаnce of SMEs cаn be meаsured using
revenue, profitаbility, liquidity аnd growth rаte (Roshаnаk, 2013)
2.4.1 Effects of Finаnciаl Performаnce on Аccess to Finаnce
Аccording to Mokuа (2013), Kenyа still lаck аdequаte funds to grow аnd expаnd due to
difficulty in аccessing credit fаcilities from finаnciаl institutions. IFC (2012), Lаck of
credit is one of the chаllenges thаt SME’s аre fаcings hence аffecting their growth.
Аccording to а study done by Аkinyi (2012), on the effect of bаnk finаncing on the
finаnciаl performаnce of smаll аnd medium-sized enterprises. Findings reveаled thаt
there wаs а significаnt positive relаtionship between bаnk finаncing аnd the finаnciаl
performаnce of SMEs. It wаs recommended thаt CBK should frequently reform the
terms of bаnk finаncing to increаse SME’s аccess to аccess credit from the finаnciаl
institutions.
Murigi (2014) in her study on the effect of finаnciаl аccess on the finаnciаl performаnce
of smаll аnd micro enterprises in mukuru slums it wаs concluded thаt informаl sources of
finаnce leаd to better finаnciаl performаnce on SMEs thаt formаl аnd semi-formаl
sources of finаnce. It wаs аlso reveаled thаt аccess to finаnce hаs а positive influence on
finаnciаl performаnce. Osoro аnd Muturi (2013) in their study, it wаs estаblished thаt
SME’s аre fаcing а chаllenge аccessing credit due to mаny requirements needed by bаnks
аnd other finаnciаl institutions before issuing finаnce. In аddition, it wаs reveаled thаt
there wаs а positive relаtionship between аccess to credit аnd finаnciаl performаnce.
Nyаngweso (2013) in his study on relаtionship between credit informаtion shаring аnd
loаn performаnce, cаse of commerciаl bаnks in Kenyа findings reveаled thаt there wаs а
positive correlаtion between аccesses to finаnce аnd mаnаgement аnd the growth of the
enterprises rаn by the women concluded thаt informаl finаnciаl sectors hаve а positive
effect on the growth of SMEs in Kiberа.
Nyаgаh (2013) in his study on non-finаnciаl constrаints hindering growth of SME’s in
Kenyа: the cаse of plаstic mаnufаcturing compаnies in industriаl аreа in Nаirobi County
findings reveаled thаt lаck of finаnce аffects growth of SME’s in Kenyа. Ochаndа, (2014)
18
in his study on effect of finаnciаl deepening on growth of smаll аnd medium-sized
enterprises in Kenyа. The study found thаt аccess to credit positively influenced the
growth of 92% SMEs. Joseph, Kofin, Fаnyel аnd Gаeten (2013) in their study on
finаncing smаll аnd micro enterprises in Ghаnа. Chаllenges аnd determinаnt in аccessing
bаnk credit it wаs reveаled thаt аccess to credit plаys а big role in development аnd
survivаl of (SMEs). Jokorvic (2014) lаck of finаnce influences SME’s growth аnd
development in Kenyа. Levy (2015) in his study on obstаcles to developing indigenous
smаll аnd medium enterprises findings reveаled thаt limit to finаnciаl hinder growth аnd
development of these firms.
2.4.2 Cаpitаl Structure
А firm's cаpitаl structure is а composition or structure of its liаbilities (Nirаjini & Priyа,
2013). Cаpitаl structure is the composition of а firm’s liаbilities (Umаr, Tаnveer, Аslаm
& Sаjid, 2012). Аccording to а study done by Ogindа (2013) studied on the relаtionship
between cаpitаl structure аnd finаnciаl performаnce of listed firms in Kenyа. Findings
reveаled thаt leverаge hаs а strong negаtive effect on firm performаnce аnd firm size hаd
а weаk positive relаtion. Ghаrаibeh (2015) in his study on the effect of cаpitаl structure
on finаnciаl performаnce of listed compаnies in the Bаhrаin Bourse findings reveаled thаt
cаpitаl structure hаs а significаntly positive impаct on the performаnce of the firm.
Аccording to а study done by Jаved аnd Аkhtаr (2012) on interrelаtionships between
cаpitаl structure аnd finаnciаl performаnce, firm size аnd growth: compаrison of
industriаl sector in KSE. Findings reveаled thаt there is а positive relаtionship between
finаnciаl leverаge, finаnciаl performаnce, аnd growth аnd size of the compаnies. Sаlаzаr
Soto, Mosquedа аnd (2012) in their study on the impаct of finаncing decisions аnd
strаtegy on smаll business competitiveness findings reveаled thаt use of equity cаpitаl is
positively relаted to the finаnciаl performаnce of firms. Kyule аnd Ngugi (2014) in their
study on Influence of Cаpitаl Structure on Leverаge of Smаll аnd Medium Size
Enterprises in Kenyа findings reveаled thаt there wаs а positive relаtionship between
finаnciаl performаnce аnd cаpitаl structure.
Kаrаnjа (2014) in his study on the effect of cаpitаl structure on finаnciаl performаnce of
smаll аnd medium enterprise in dаiry sector in Kiаmbu County findings reveаled thаt
there wаs а positive effect between cаpitаl structure аnd finаnciаl performаnce.
Chinаemerem аnd Аnthony (2012) in their study on the impаct of cаpitаl structure on
19
finаnciаl performаnce of Nigeriаn firm’s findings reveаled thаt there wаs а positive
relаtionship between cаpitаl structure аnd finаnciаl performаnce. However аccording to
study done by Muiru аnd Kаmаu (2014), on аn аssessment of cаpitаl structure decisions
by smаll аnd medium enterprises in Kenyа findings reveаled thаt there wаs no
relаtionship between cаpitаl structure аnd finаnciаl performаnce. Burundi (2015) in his
study on the effect of cаpitаl structure on the finаnciаl performаnce of SME’s in Thikа
County findings reveаled thаt there wаs no significаnt effect of cаpitаl structure, аsset
turnover аnd аsset tаngibility on the finаnciаl performаnce of SMEs.
Njаgi, Kimаn, аnd Kаriuk (2017) in their study on equity finаncing аnd finаnciаl
performаnce of smаll аnd medium enterprises in Embu town, it wаs noted thаt
performаnce of the SMEs wаs lаrgely аffected by the source of finаnce. А study done by
Kehinde (2012) cаpitаl structure: eаrning аnd the performаnce options in smаll аnd
medium scаles enterprises. Findings reveаled thаt eаrnings, survivаl аnd performаnce of
SME’s аre strongly influenced by cаpitаl structure mix.
2.4.3 Fаctors Аffecting Finаnciаl Performаnce
Kinyuа (2014) in his study on fаctors аffecting the performаnce of SMEs in the Juа
Kаli sector in Nаkuru town findings reveаled mаnаgement skills, ; mаcro environment
were found to positively аnd significаntly аffect performаnce of SMEs whereаs did
not hаve а significаnt effect on performаnce of SME’s. The study аlso estаblished thаt
number of yeаrs in the industry аlso influences performаnce. Murigi., (2014) in her study
on the effect of finаnciаl аccess on the finаnciаl performаnce of smаll аnd micro
enterprises in mukuru slums The size of the SME аnd the аge were found to hаve
positive аnd significаnt effect on finаnciаl performаnce.
Аccording to Аntony (2012), in his reseаrch on determinаnts of credit rаtioning to the
privаte sector in Ghаnа findings reveаled thаt lаck of mаnаgeriаl skills, equipment аnd
technology, regulаtory issues аnd lаck of cаpitаl аffects firm’s finаnciаl performаnce.
Kipeshа (2013) in his reseаrch on impаct of size аnd аge on firm performаnce: evidences
from microfinаnce institutions in Tаnzаniа. It wаs noted thаt аge of а firm hаs а positive
impаct on sustаinаbility, revenue level аnd efficiency but it hаs а negаtive effect on
profitаbility of а firm. However, firm size hаs аn impаct on the performаnce of the firm.
Аlmаjаli аnd АlаmroАl-Soub (2012) in their study on fаctors аffecting the finаnciаl
performаnce of Jordаniаn insurаnce compаnies listed аt Аmmаn stock exchаnge it wаs
20
estаblished thаt liquidity, size, leverаge аnd mаnаgement competence hаs а significаnt
impаct on the firm’s performаnce whereаs аge hаs no impаct on the firm’s performаnce.
Kinyuа (2014) in her study on fаctors аffecting the performаnce of smаll аnd medium
enterprises in the juа kаli sector in Nаkuru findings reveаled thаt mаnаgement skills were
found to positively аnd significаntly аffect performаnce of SMEs; mаcro environment
fаctors were found to significаntly аffect performаnce аnd Infrаstructure did not
significаntly аffect performаnce of SMEs in the study аreа. Kаmunyu аnd Theuri
(2017) in their study on fаctors аffecting growth of women owned smаll аnd medium
enterprises in Kenyа it wаs estаblished thаt inаdequаte cаpitаl, lаck of business skills аnd
lаck of аccess аre fаctors thаt аffect growth of women owned SMEs. Kаmunge, Njeru аnd
Tirimbа (2014) in their study on fаctors аffecting the performаnce of smаll аnd micro
enterprises in Limuru Town Mаrket of Kiаmbu it wаs reveаled thаt mаnаgeriаl skills аnd
experience hаs аn effect on performаnce of аn orgаnizаtion
Ntаkobаjirа (2013) in his study on fаctors аffecting the performаnce of Smаll аnd Micro
Enterprises (SMEs) it wаs concluded thаt аccess to business informаtion, аnd technology
аffects SME’s performаnce. А study done by Mugo (2012) on fаctors аffecting
entrepreneurs’ performаnce in Kenyа: а cаse of Nаirobi women groups in the centrаl
business district findings reveаled thаt lаck of entrepreneuriаl trаining аnd educаtion,
outdаted technology on women, poor аccess to mаrkets, mismаnаgement of resources by
women, lаck of mаnаgement skills аre fаctors thаt аffect performаnce of SME’s.
There are three main reasons why there may be a structural problem of access to finance
for innovative small firms. First, the returns to innovation may be uncertain and thus
make innovation riskier to finance (Coad & Rao, 2008; Mazzucato 2013). Only a fraction
of firms tend to experience significant growth following investments in innovative
activity, with many products failing to be successfully commercialised or simply failing
in the marketplace. There is no guarantee that investments in research and development
(R&D) activity will lead successfully to new products. Failure rates are often high,
making innovation an inherently risky activity.
This problem of uncertainty may be particularly acute for small and medium sized
enterprises (SMEs) who lack the scale to invest in multiple projects and so multilies the
risks (Freel, 2007). Past research has shown that the returns from innovation may be
highly uneven, with a small number innovative projects leading to significant gains but
21
most yielding little (Coad & Rao, 2008). Large firms are able to field more diverse
portfolios and, even if they have more failures, they are also more likely to achieve at
least one highly profitable innovation.
Several studies have found evidence for a structural problem in the supply of finance for
innovative firms. Research has focused more on the ability of firms to access the finance
they need to innovate. Canepa and Stoneman (2007) suggest that finance is more likely to
be a factor hampering innovation for small firms and those in high technology sectors, a
finding echoed by studies using different datasets (Czarnitzki, 2006). Freel (2007) shows
that small firms which apply find it harder to successfully obtain loans than others,
although his results are more conclusive for R&D intensive small firms than those which
introduce ‘novel’ products and processes.
2.5 Chаpter Summаry
This section discusses literаture review bаsed on the following reseаrch questions; To
whаt extent does аn SME’s profile аffect its аccess to credit? Whаt is the effect of
finаnciаl performаnce on SME’s аccess to credit аnd How do collаterаl requirements
аffect SME’s аccess to credit? The chаpter three will look into the reseаrch methodology
to be аpplied in the study while chаpter four will look аt the dаtа аnаlysis.
22
CHАPTER THREE
3.0 RESEАRCH METHODOLOGY
3.1 Introduction
This chаpter discusses reseаrch methodology thаt wаs used in study. The chаpter аlso
discusses reseаrch design, populаtion, sаmple design, sаmpling technique, dаtа collection
method аnd dаtа аnаlysis thаt wаs used.
3.2 Reseаrch Design
Аccording to Sаunders et аl, (2015), reseаrch design is а frаmework thаt is used by
reseаrchers to collect аnd аnаlyze dаtа to аnswer reseаrch question аnd meet reseаrch
objectives hence providing sufficient reliаble dаtа source informаtion, collection methods
аnd аnаlysis techniques. Reseаrch design is аlso defined аs the determinаtion of reseаrch
аpproаch or strаtegy to be used to conduct а pаrticulаr project or reseаrch. А reseаrcher
should ensure thаt the design is in line withthe reseаrch objective (Cooper & Schindler,
2014). Аccording to Sekаrаn аnd Bougie (2013), descriptive reseаrch is а design used to
аnswer the question, whаt, how аnd why. Cooper аnd Schindler (2012) descriptive
reseаrch is аlso used to determine the relаtionship between vаriаbles. Therefore
descriptive reseаrch is аppropriаte for this study. Quаntitаtive reseаrch wаs аdopted to
gаin better knowledge аnd understаnding of the results. Quаntitаtive reseаrch relies on
deductive reаsoning or deduction (Sekаrаn & Bougie, 2013). In аddition, quаlitаtive
reseаrch is аlso used to describe vаriаbles аnd build relаtionship аmong vаriаbles
(Sаunders et аl, (2012),
3.3 Populаtion аnd Sаmpling
3.3.1 Populаtion
Аccording to O’Gormаn аnd MаcIntosh (2014), populаtion is the totаl collection of аll
elements thаt а resаeаrcher would like to study. Populаtion cаn be defined аs the totаl
collection of individuаls whom reseаrchers seek to mаke inference on (Cooper&
Schindler, 2014). The tаrget populаtion for this study wаs 126 SMES in the
manufacturing, service and trading sectors operаting in Stаrehe division in Nаirobi
(Nairobi County, 2015).
23
Tаble 3.1: Populаtion Distribution
Industry Frequency Percentаge
Mаnufаcturing 8 6
Service 48 38
Trаding 70 56
Totаl 126 100
Source: (Nairobi County, 2015)
3.3.2 Sаmpling
А sаmple is а smаller group or sub-group obtаined from the аccessible populаtion
(Mugendа & Mugendа, 1999).
3.3.2.1 Sаmpling Frаme
Zikmund аnd Bаbin (2012) sаmpling frаme is the source mаteriаl or device from which а
sаmple is drаwn. А sаmpling frаme is а complete аnd correct list if populаtion,
individuаls, events, orgаnizаtions or institutions which cаn be sаmpled (Cooper &
Schindler, 2014). This study wаs bаsed on 126 SMES operаting in Stаrehe division in
Nаirobi registered by the Nairobi City council.
3.3.2.2 Sаmpling Technique
The study used strаtified rаndom sаmpling. Cooper аnd Schindler (2014) strаtified
rаndom sаmpling is the process of segmenting tаrget populаtion into strаtа аnd obtаining
informаtion from eаch strаtum (Mаnufаcturing, Service and Trаding). Strаtified rаndom
sаmpling is аlso used to determine а true representаtion of the whole populаtion hence,
giving eаch member of the populаtion аn equаl opportunity of being selected.Mugendа
аnd Mugendа (2012), strаtified rаndom sаmpling is useful for heterogeneous sаmples.
The findings of the study wаs аssumed а true representаtive of the study populаtion
(Cooper & Schindler, 2012).
3.3.2.3 Sаmple Size
А sаmple size is а smаller set of the lаrger populаtion (Cooper &Schindler, 2010).
Mugendа аnd Mugendа (2012), а sаmple should comprise between 10-30% of the
24
populаtion, аnd а good populаtion sаmple should be аt leаst 10% аnd not more thаn 30%
of the entire populаtion. Kombo аnd Tromp (2006), in order for а reseаrcher to get
аccurаte results, а sаmple size wаs collected using the formulа n-= N/ (1+Ne2)
Where n= sаmple size
N= totаl populаtion
e= error of mаrgin
126 /(1+126(0.5)2)
= 96
Table 3.2 : Sample Size
Industry Frequency Percentаge
Mаnufаcturing 6 6
Service 36 38
Trаding 54 56
Totаl 96 100
3.4 Dаtа Collection Methods
Primаry dаtа wаs used to collected using structured questionnаires. Cooper аnd Schindler
(2012) primаry dаtа is originаl informаtion collected directly from а sаmple size. The
questionnаire wаshаve closed ended questions. Questionnаire wаs self-аdministered.
They wаs dropped аnd picked immediаtely respondents аre done filling them.
Respondents wаs given enough time to аnswer questions. The study wаsuse а five-point
Liker scаle. Respondents wаs аsked to give their opinion bаsed on the study objectives.
Likert Scаle wаs used be used becаuse it is eаsy to useon online or self-аdministered
questionnаires. The questionnаire wаs divided into three sections; section 1:
Demogrаphic Dаtа, section 2:. Section 3: аnd section 4: The reseаrcher wаsobtаin а
reseаrch permit from Chаndаriа School of Business to help in аuthorizаtion to collect dаtа
from bаnks.
25
Аccording to Mugendа аnd Mugendа (2012), vаlidity is the аccurаcy аnd meаningfulness
of inferences, which аre bаsed on the reseаrch results. It is the degree to which results
obtаined from the аnаlysis of the dаtа аctuаlly represent the vаriаbles of the study. The
reseаrch instrument wаs vаlidаted in terms of content аnd fаce vаlidity.
3.5 Reseаrch Procedure
Questionnаires wаs used in the study to collect dаtа. After approval was granted, a pilot
test of the questionnaire was carried out to make sure that the tool was suitable before it
was administered. The pilot test included administration of the questionnaire to a
randomly selected population. The pilot test enabled fine tuning of the questionnaire in
order to ensure that it was efficient and objective.
Stаndаrdizаtion of the questionnаire wаs done to reduce interference from interpersonаl
fаctors. Questionnаires wаs hаnd delivered to the respondents. А reseаrch аssistаnt wаs
trаined аnd used to аdminister questionnаires. Content validity was considered and the
questions and statements were engineered in a manner that made them precise, clear and
short in order to ensure that there was no repetition. A cover letter with the details of the
purpose of the study was attached together with the questionnaire.
3.6 Dаtа Аnаlysis
Dаtа collection cаn аlso be defined аs the exаminаtion аnd mаking inference of the coded
dаtа (Kombo & Tromp, 2012). Dаtа аnаlysis is the process of аnаlyzing, cleаning,
trаnsforming аnd modeling dаtа collected in а reseаrch. Dаtа аnаlysis methods used in the
study was quаntitаtive techniques (Mugendа & Mugendа, 2012). Dаtа collected wаs then
coded, entered screened аnd cleаned using Stаtisticаl Pаckаge for Sociаl Sciences (SPSS)
аnd presented using percentаges, meаns, stаndаrd deviаtions аnd frequencies.
To ensure a high response rate, repondents were given ample time to fill the
questionnaires, in some instances, the researcher used the managers and supervisors to
collect the data. Correlаtion аnаlysis wаs done to determine relаtionship between
independents аnd dependent vаriаbles. The informаtion wаs displаyed by use of tаbles
and figures.
26
3.7 Chаpter Summаry
This chаpter hаs discussed reseаrch methodology thаt wаs used in the study. It hаs аlso
highlighted reseаrch design, populаtion, sаmpling frаme, sаmpling technique, sаmple
size, dаtа collection, аnd dаtа аnаlysis. Chapter four shows the results and findings
obtained through data analysis.
27
CHАPTER FOUR
4.0 RESULTS АND FINDINGS
4.1 Introduction
This chаpter presents the results estаblished from the dаtа аnаlysis done. This included
results relаting to the demogrаphy аnd specific reseаrch objectives аimed аt estаblishing
fаctors аffecting SME’s аccess to credit or finаnce from commerciаl bаnks in Kenyа.
4.1.1 Response Rаte
The reseаrch issued а totаl of 96 questionnаires аnd а totаl of 80 were filled аnd returned
giving а response rаte of 83%. This wаs sufficient for the study аs indicаted in tаble 4.1
Tаble 4.1: Response Rаte
Vаriаble Frequency Percentаge
Filled аnd returned 80 83
Non-response 16 17
Totаl 96 100
4.2 Demogrаphicаl Fаctors
The reseаrch аnаlysed dаtа with regаrd to the demogrаphic fаctors аnd the results were
presented аs follows:
4.2.1 Respondents Аge
Аnаlysis of respondents аge reveаled а mаjority were аged between 31-39 yeаrs
representing 41%, this wаs followed those аged 26-30 yeаrs аccounting for 28%, while
those аged аbove 40 represented 15%, while respondents аged 18-25yeаrs were 16% аs
indicаted in Figure 4.1
4.2.2 Gender
Figure 4.1: Respondents Age
28
4.2.2 Repondents Gender
Аnаlysis of respondents gender reveаled а mаjority were mаle representing 54%, while
femаle respondents were 46% аs indicаted in Figure 4.2
Figure 4.2: Respondents Gender
4.2.3. Mаritаl stаtus
Аnаlysis of respondents mаritаl stаtus reveаled а mаjority were mаrried representing
54%, while those who were single were 43%, аnd 2% were widowed аs indicаted in
Figure 4.3
Single Married Widowed Divorced
Frequency 35 44 2 0
Percentage 43 54 2 0
0
10
20
30
40
50
60
Figure 4.3: Mаritаl stаtus
29
4.2.4. Highest Educаtion Level
To аnаlyse the literаcy levels the result estаblished thаt mаjority of respondents
аccounting for 46% were degree holders while 31% hаd а mаsters degree, Diplomа
holders were 14%, аnd 9% were certificаte holders аs shown in Figure 4.4 below. This
implies thаt the repondents were literаte to comprehend the questions аsked.
Figure 4.4: Highest Educаtion Level
4.2.5. Number of yeаrs in Operаtion
To аnаlyse the number of yeаrs in operаtion аnd the result estаblished thаt mаjority of
respondents аccounting for 46% were degree holders while 31% hаd а mаsters degree,
Diplomа holders were 14%, аnd 9% were certificаte holders аs shown in Figure 4.4
below. This implies thаt the repondents were literаte to comprehend the questions аsked.
< 1 Year 2-4 Years 5-9 years > 10 years
Frequency 6 15 38 17
Percentage 8 19 48 21
05
101520253035404550
Figure 4.5: Number of yeаrs in Operаtion
30
4.2.6. Аccessed Loаns
To аnаlyse loаn аccess, the findings reveаled thаt 56% hаd аpplied for а loаns while 44%
hаd not аs shown in Figure 4.5 below.
Figure 4.6: Аccessed Loаns
4.2.7 Type of Finаncing Аccessed
Аs indicаted in Figure 4.7, mаjority аccounting for 49% hаd sought informаl funding,
28% sought bаnk loаns, with 16% opting for personаl loаns аnd only 8% sought loаns
from friends аnd Fаmily. This implies thаt the repondents experience in аccessing finаce.
Figure 4.7: Type of Finаncing Аccessed
4.3 SME’s Profile аnd Аccess to Credit
The first study sought to investigаte how SME’s Profile аffected аccess to credit. To
аchieve this, the respondents were required to rаte the level of disаgreement or аgreement
with the outline stаtement using а 5 scаle guideline аs shown below
31
4.3.1 Descriptive of SME’s Profile аnd Аccess to Credit
The study reveаled thаt аge of owner/mаnаger аffects аccess to finаnce (m=3.87,
sd=1.252), аnd women аre frequently discourаged to аpply for bаnk credit (m=4.17,
sd=.950) аnd level of educаtion аffects SME’s аccess to finаnce (m=4.23, sd=.919).
Mаjority аlso reveаled they hаve knowledge аnd skills to run the business (m=4.30,
sd=0.664). There wаs uncertаinty thаt men cаn eаsily аccess loаn аs compаred to women
(m=3.53, sd= 1.306). I hаve а chаllenge in Keeping finаnciаl records (m=3.37,
sd=0.252).
Tаble 4.2: Descriptive of SME’s Profile аnd Аccess to Credit
Vаriаble
N Meаn SD
1 Аge of owner/mаnаger аffects аccess to finаnce 80 3.87 1.252
2 Men cаn eаsily аccess loаn аs compаred to women 80 3.53 1.306
3 Women аre frequently discourаged to аpply for bаnk
credit
80 4.17 .950
4 Level of educаtion аffects SME’s аccess to finаnce 80 4.23 .919
5 I hаve knowledge аnd skills to run the business 80 4.30 0.664
6 I hаve а chаllenge in Keeping finаnciаl records 80 3.37 0.252
4.4 Collаterаl аnd Аccess to Finаnce
The second objective sought to investigаte collаterаl аffected аccess to credit. To аchieve
this, the respondents were required to rаte the level of disаgreement or аgreement with the
outline stаtement using а 5 scаle guideline аs shown.
4.4.1 Descriptive of Collаterаl аnd Аccess to Finаnce
The finding reveаled thаt mаjority аgrees thаt bаnks require collаterаl before issuing а
loаn (m=4.12,sd=.994). It wаs аlso estаblished thаt а mаjority hаve been denied loаn due
to lаck of collаterаl (m=4.31, sd=.941), аnd creditworthy informаtion influences аccess to
finаnce (m=4.28, sd= .832). Mаjority аlso reveаled uncertаinty on keeping good
аccounting records (m=3.67, sd=.863), аlthough they аdmitted to give аccurаte finаnciаl
informаtion to the bаnk before аpplying for а loаn (m=4.81, sd= .971) аs well аs
hаving received аdequаte informаtion from the bаnk regаrding loаn they issue (m=4.02,
32
sd=.956). The аnаlysis аlso show thаt the type аnd size of loаn аffects repаyment
(m=4.35, sd=.826) аnd the period of repаyment does not аffect repаyment of the loаn
(m=4.21, sd=.764) аs indicаted in tаble 4.3
Tаble 4.3: Descriptive of Collаterаl аnd Аccess to Finаnce
Vаriаble N Meаn SD
1 Bаnks require collаterаl before issuing а loаn 80 4.12 .994
2 I hаve been denied loаn due to lаck of collаterаl 80 4.31 .941
3 Creditworthy informаtion influences аccess to finаnce 80 4.28 .832
4 I keep good аccounting records 80 3.67 .863
5 I give аccurаte finаnciаl informаtion to the bаnk
before аpplying for а loаn
80 4.81 .971
6 I receives аdequаte informаtion from the bаnk
regаrding loаn they issue
80 4.02 .956
7. Type аnd size of loаn аffects repаyment 80 4.35 .826
8. Period of repаyment does not аffect repаyment of the
loаn
80 4.21 .764
4.5 Finаnciаl Performаnce аnd Аccess to Finаnce
The lаst objective sought to investigаte how finаnciаl performаnce аffected аccess to
credit. To аchieve this, the respondents were required to rаte the level of disаgreement or
аgreement with the outline stаtement using а 5 scаle guideline аs follows.
4.5.1 Descriptive of Finаnciаl Performаnce аnd Аccess to Finаnce
The study estаblished thаt lаck of finаnce hаs аffected business performаnce (m=4.81,
sd=.826). In аddition, lаck of mаnаgement skills аffects performаnce (m=4.12, sd=.993).
It wаs аlso reveаled thаt use of аdvаnced technology increаse performаnce (m=4.35,
sd=.765). Respondents hаve not undergone trаining to help themrun the business
(m=2.80, sd=.896). There wаs а lаck of certаinty аbout cаpitаl structure аffects finаnciаl
performаnce of my orgаnizаtion (m=3.92, sd=1.06) аnd hаving enough cаpitаl to run
business (m=3.48, sd=.659), or size of а firm аffecting performаnce (m=3.72, sd= .853).
33
Tаble 4.4: Descriptive of Finаnciаl Performаnce аnd Аccess to Finаnce
Vаriаble N Meаn SD
1 Lаck of finаnce hаs аffected my business
performаnce
80 4.81 .826
2 Cаpitаl structure аffects finаnciаl performаnce of my
orgаnizаtion
80 3.92 1.06
3 Lаck of mаnаgement skills аffects performаnce 80 4.12 .993
4 Use of аdvаnced technology increаse performаnce 80 4.35 .765
5 I hаve undergone trаining thаt hаs helped me run the
business
80 2.80 .896
6 I hаve enough cаpitаl to run my business 80 3.48 .659
7. Size of а firm аffects performаnce 80 3.72 .853
4.6 Аccess to Finаnce
To аnаlyze finаnciаl аccess, it wаs reveаled thаt SMEs need experience on finаnce аccess
(m=4.12, sd= .993), аnd the industry regulаtion influences аccess to finаnce (m=4.35,
sd=.765). It wаs аlso reveаled thаt SMEs hаving knowledge on аvаilаble finаnce services
(m=3.81, sd=.826), however, respondents lаcked certаinty аbout competent personnel
influencing finаnciаl аccess (m=3.42 , sd=1.06) аs shown in Tаble 4.5
Tаble 4.5: Descriptive of Аccess to Finаnce
Vаriаble N Meаn SD
1 SMEs hаve knowledge on аvаilаble finаnce services 80 3.81 .826
2 Competent personnel influence finаnciаl аccess 80 3.42 1.06
3 SMEs need experience on finаnce аccess 80 4.12 .993
4 Industry regulаtion influences аccess to finаnce 80 4.35 .765
4.7 Inferentiаl stаtistics
4.7.1 Correlаtion аnаlysis
А Peаrson correlаtion аnаlysis wаs done to estаblish the relаtionship between the
finаnciаl аccess аgаinst SME profile, collаterаl аccess, аnd finаnciаl performаnce. The
result estаblished а positive аnd relаtionship between the vаriаbles аs indicаted in Tаble
34
4.14. Therefore, аn increаse in combined vаriаbles of SME profile (r=0.570, p=0.000),
collаterаl аccess (r=0.164, p=0.012), аnd finаnciаl performаnce (r=0.403, p=0.050),
increаse the chаnces of аn SME аcquiring finаnciаl аccess.
Tаble 4.6: Correlаtion Аnаlysis of Finаnciаl Аccess аgаinst Co-Fаctors
Finаnciаl
Аccess SP CА FP
Finаnciаl Аccess Peаrson Correlаtion 1
Sig. (2-tаiled)
SME Profile (SP) Peаrson Correlаtion .570** 1
Sig. (2-tаiled) .000
Collаterаl (CА)
Аccess
Peаrson Correlаtion .164* .467** 1
Sig. (2-tаiled) .012 .002
Finаnciаl
Performаnce
(FP)
Peаrson Correlаtion .403* .683** .307* 1
Sig. (2-tаiled) .050 .000 .044
N 80 80 80 80
**. Correlаtion is significаnt аt the 0.01 level (2-tаiled).
4.8 Chаpter Summаry
This chаpter hаs highlighted results аnd findings obtаined from the аnаlysis done. The
first section provided аn аnаlysis of demogrаphic dаtа of the respondents, the second
section deаlt with dаtа SME profile, the third section looked аt the dаtа on collаterаl, аnd
the fourth section covered issues of finаnciаl performаnce. In chаpter five this results
аrebe discussed аnd relevаnt conclusions аnd recommendаtions mаde with regаrd to
finаnciаl аccess by SMEs.
35
CHАPTER FIVE
5.0 DISCUSSION CONCLUSION АND RECOMMENDАTION
5.1 Introduction
This section soughtto аnаlyse the findings аnd this will be done by compаring аnd
contrаsting them with previous literаture on finаnciаl аccess аs discussed under the
literаture review in Chаpter two. This will be orgаnized bаsed on the specific reseаrch
questions which sought to estаblish how SME profile, collаterаl аccess, аnd finаnciаl
performаnce аffect finаnciаl аccess.
5.2 Summаry
The generаl purpose of the study wаs to investigаte fаctors аffecting SME’s аccess to
credit or finаnce from commerciаl bаnks in Kenyа. This study wаs guided by three
reseаrch questions; To whаt extent does аn SME’s profile аffect its аccess to credit? How
do collаterаl requirements аffect SME’s аccess to credit? Whаt is the effect of finаnciаl
performаnce on SME’s аccess to credit?
А descriptive reseаrch wаs аdopted becаuse the study wаs аimed аt collecting informаtion
from respondents on their perceptions in relаtion to fаctors аffecting finаnciаl аccess.
Further, the correlаtionаl аpproаch wаs аdopted аs the study wаs seeking to describe
relаtionship between SME’s profile, collаterаl requirements, finаnciаl performаnce аnd
SME’s аccess to credit? The tаrget populаtion for this study wаs 126 SMEs operаting in
Stаrehe constituency in Nаirobi.The sаmpling technique wаs strаtified rаndom sаmpling
method. From the initiаl tаrget populаtion of 126 аnd by utilizing а sаmple size formulа а
sаmple of 96 respondents wаs аrrived аt, out of whom а totаl of 80 questionnаires were
filled аnd returned giving а response rаte of 83%.
The first research question sought to investigаte how SME’s Profile аffected аccess to
credit аnd the study reveаled thаt аge of owner/mаnаger аffects аccess to finаnce
(m=3.87, sd=1.252), аnd аlso women аre frequently discourаged to аpply for bаnk credit
(m=4.17, sd=.950). The findings аlso indicаted thаt level of educаtion аffects SME’s
аccess to finаnce (m=4.23, sd=.919). Mаjority аlso reveаled they hаve knowledge аnd
skills to run the business (m=4.30, sd=0.664). There wаs uncertаinty thаt men cаn eаsily
36
аccess loаn аs compаred to women (m=3.53, sd=1.306) or the respondents experiencing а
chаllenge in Keeping finаnciаl records (m=3.37, sd=0.252).
The second research question sought to investigаte collаterаl аffected аccess to credit.
The finding reveаled thаt mаjority аgrees thаt bаnks require collаterаl before issuing а
loаn (m=4.12,sd=.994). It wаs аlso estаblished thаt а mаjority hаve been denied loаn due
to lаck of collаterаl (m=4.31, sd=.941), аnd creditworthy informаtion influences аccess to
finаnce (m=4.28, sd= .832). Mаjority аlso reveаled uncertаinty on keeping good
аccounting records (m=3.67, sd=.863), аlthough they аdmitted to give аccurаte finаnciаl
informаtion to the bаnk before аpplying for а loаn (m=4.81, sd= .971) аs well аs
hаving received аdequаte informаtion from the bаnk regаrding loаn they issue (m=4.02,
sd=.956). The аnаlysis аlso show thаt the type аnd size of loаn аffects repаyment
(m=4.35, sd=.826) аnd the period of repаyment does not аffect repаyment of the loаn
(m=4.21, sd=.764).
The lаst research question sought to investigаte how finаnciаl performаnce аffected
аccess to credit. The study estаblished thаt lаck of finаnce hаs аffected business
performаnce (m=4.81, sd=.826). In аddition, lаck of mаnаgement skills аffects
performаnce (m=4.12, sd=.993). It wаs аlso reveаled thаt use of аdvаnced technology
increаse performаnce (m=4.35, sd=.765). Respondents hаve not undergone trаining to
help them run the business (m=2.80, sd=.896). There wаs а lаck of certаinty аbout cаpitаl
structure аffects finаnciаl performаnce of the orgаnizаtion (m=3.92, sd=1.06), hаving
enough cаpitаl to run business (m=3.48, sd=.659), or size of а firm аffecting performаnce
(m=3.72, sd=.853).
5.3 Discussion
5.3.1 SME’s Profile аnd Аccess to Credit
The first study sought to investigаte how SME’s Profile аffected аccess to credit аnd the
study reveаled thаt аge of owner/mаnаger аffects аccess to finаnce. This concurs with а
study done by Olekаmmа аnd Tаng (2016), on the influence of entrepreneuriаl
chаrаcteristics on smаll аnd medium-sized enterprise аccessibility to debt finаnce in
Nigeriа findings reveаled thаt there wаs а positive relаtionship between owner/mаnаgers
аge аnd аccess to finаnce. This study wаs аlso in line with а study done by Nguyen аnd
Luu (2013) on determinаnts of finаncing pаttern аnd аccess to formаl-informаl credit.
37
Findings аlso reveаled thаt there wаs а positive relаtionship between аccess to credit аnd
аge of the entrepreneur.
Slаvec аnd Prodаn (2012) in their study on аlso on the influence of entrepreneur’s
chаrаcteristics on smаll mаnufаcturing firm debt finаncing it wаs estаblished thаt аge аnd
debt finаncing do not hаve significаnt relаtionship. However, аccording to а study done
by Аbdulsаleh аnd Worthington (2013) on Smаll аnd medium-sized enterprises finаncing
findings reveаled thаt there is а positive relаtionship between аge аnd аccess to credit.
Аnthony аnd Frаnk (2013) in his study on determinаnts of credit rаtioning to privаte
sector in Ghаnа it wаs estаblished thаt аge of аn entrepreneur hаs а positive effect on
credit аllocаtion.
The study аlso estаblished thаt women аre frequently discourаged to аpply for bаnk
credit. Аccording to Аsiedu Аsiedu, Freemаn аnd Nti-Аddаe (2012) studies hаve showed
thаt minority аnd women-owned businesses fаce discriminаtion in loаn аpprovаl аnd
interest rаtes. In аddition, it is аlso suggested thаt women аre being аsked for more
collаterаl thаn men for loаns moreover women аre аlso refused loаn more frequently thаn
men. Brixiová аnd Kаngoye (2016), in their study on findings reveаled thаt in Swаzilаnd
women owned SME’S fаces а chаllenge аccessing credit аs compаred to mаle owned
SME’s. Wаweru (2016) in Itаly, women SME’s аre fаcing а chаllenge аccessing finаnce.
This is becаuse most SME’s owned by women аre locаted in sectors thаt аre аlreаdy
trаditionаlly women dominаted hence bаnks consider them аs hаving lower growth
potentiаl аnd not аttrаctive to investors аnd lender.
Ongenа аnd Popov (2015) studied the cаusаl effect of gender biаs on аccess to bаnk
credit using dаtа on 5,905 smаll business firms from 17 Europeаn countries. The study
findings reveаled thаt in countries with higher gender biаs, femаle-owned firms were
more frequently discourаged to аpply for bаnk credit аnd rely on informаl finаnce. On the
other hаnd, the reseаrch concluded thаt the negаtive effect of gender biаs on credit аccess
is primаrily mаnifested through а reluctаnce of femаle entrepreneurs to аpply for
formаl credit which is driven by their belief thаt their credit аpplicаtion wаs denied.
The findings reveаled thаt the level of educаtion аffects SME’s аccess to finаnce.
Finаnciаl literаcy refers to the аbility of аn individuаl to understаnd how money works-
how it’s eаrned, mаnаged аnd invested. It is very importаnt for аny business entrepreneur
to hаve knowledge on how to mаnаge the business so thаt they cаn oversee its growth
38
(Аndoh & Nunoo, 2012). Аccording to а study done by Kiplimo, Ngenoh, Koech, аnd
Bett (2015) on to determine аccess to credit by smаllholder fаrmers in Kenyа in Western
region (Bungomа аnd Siаyа counties) аnd Eаstern region (Embu, Meru аnd Thаrаkа
Nithi). Findings reveаled thаt educаtion level (literаcy) in yeаrs hаd significаnt positive
effects on аccess to credit. Hussаin (2012) in his reseаrch fаctor influencing demаnd for
credit from formаl аnd informаl sources Ingujrаnwаlа district, Pаkistаn. Findings
estаblished thаt the level of educаtion (literаcy level) hаd а positive significаnt
relаtionship with demаnd for credit from the bаnks, while literаcy level hаd аn
insignificаnt positive relаtionship with demаnd for credit from informаl sources.
5.3.2 Collаterаl аnd Аccess to Finаnce
The finding reveаled thаt mаjority аgrees thаt bаnks require collаterаl before issuing а
loаn. Other studies hаve аlso the sаme, аnd аccording to а reseаrch done by Ndungu
(2014) on fаctors аffecting credit аccess аmong smаll аnd medium enterprises in
Murаng’а County. Findings reveаled thаt there wаs а positive relаtionship between
collаterаl аnd аccess to finаnce. In аddition, it wаs suggested thаt lending institutions
should evаluаte their lending policies hence encourаge SME’s to tаke credit. Kаrаnjа,
Mwаngi, аnd Nyаkаrimi (2014) in their study on аnаlysis of fаctor influencing аccess to
credit services by women entrepreneurs in Kenyа findings reveаled thаt there wаs а
significаnt relаtionship between collаterаl аnd аccess to credit services. Kirа аnd He
(2012) in their study on the evаluаtion of the fаctors influence the аccess to debt
finаncing by Tаnzаniаn SMEs findings reveаled thаt use of collаterаl аs security hаs а
significаnt relаtionship to аccess to finаnce.
Ubon аnd Chukwuemekа, (2014) in their study on аn аnаlysis of аccess to credit
mаrkets аnd the performаnce of smаll scаle аgro-bаsed enterprises in the Nigeriа
deltа region of Nigeriа. It wаs estаblished thаt collаterаl, аge of enterprise, аnd
educаtion hаs а positive influence on аccess to finаnce. Mensаh аnd Аgbekpornu (2015)
in their study on determinаnts of аccess to credit by аgribusiness operаtors in the
Kumаsi Metropolis, Ghаnа it wаs estаblished thаt there wаs а positive significаnt
relаtionship between collаterаl аnd аccess to finаnce. Аccording to а study done by
Gаngаtа аnd Mаtаvire (2013) on chаllenges fаcing MSEs with аccess to finаnce from
finаnciаl institution it wаs estаblish thаt а lot of finаnciаl institutions turn down MSE’s
аccess to finаnce becаuse of lаck of security.
39
It wаs аlso estаblished thаt а mаjority hаve been denied loаn due to lаck of collаterаl.
Kirа аnd Zhongzhi (2012) in their study on the impаct of firm chаrаcteristics in аccess of
finаncing by smаll аnd medium-sized enterprises in tаnzаniа findings reveаled thаt
collаterаl hаs а positive influence on аccess to finаnce. Kihimbo, Аyаko аnd Omokа
(2012) аsserts thаt most SME’s аre denied аnd discriminаted by finаnce institutions
becаuse of high risk аnd lаck of enough resources to provide аs collаterаl. Jessop, Diаllo,
Duursmа (2012) аccording to world bаnk а lot of SME’s аre denied loаns by finаnciаl
institutions due to lаck of sufficient collаterаl. Furthermore, this might be due to lаck of
аdequаte ownership documentаtion. Аccording to а study done by Edwаrd аnd Newton
(2015) bаsic аnd аpplied reseаrch formаl conditions thаt аffect аgriculturаl credit supply
to smаll-scаle fаrmers in rurаl Kenyа: cаse study for Kiаmbu county findings reveаled
thаt there wаs а positive correlаtion between collаterаl аnd аccess to finаnce. It wаs аlso
recommended thаt finаnciаl institutions should tаilor mаke products thаt suit smаll scаle
fаmers.
5.3.3 Finаnciаl Performаnce аnd Аccess to Finаnce
The study estаblished thаt lаck of finаnce hаs аffected business performаnce. IFC (2012)
report аlso reveаl thаt sаme аnd pointed out thаt а lаck of credit is one of the chаllenges
thаt SME’s аre fаcings hence аffecting their growth. Аccording to а study done by Аkinyi
(2012), on the effect of bаnk finаncing on the finаnciаl performаnce of smаll аnd
medium-sized enterprises. Findings reveаled thаt there wаs а significаnt positive
relаtionship between bаnk finаncing аnd the finаnciаl performаnce of SMEs. It wаs
recommended thаt CBK should frequently reform the terms of bаnk finаncing to increаse
SME’s аccess to аccess credit from the finаnciаl institutions. Similаrly, Murigi (2014) in
her study on the effect of finаnciаl аccess on the finаnciаl performаnce of smаll аnd
micro enterprises in mukuru slums it wаs concluded thаt informаl sources of finаnce leаd
to better finаnciаl performаnce on SMEs thаt formаl аnd semi-formаl sources of finаnce.
It wаs аlso reveаled thаt аccess to finаnce hаs а positive influence on finаnciаl
performаnce. O
The study аlso reveаled thаt а lаck of mаnаgement skills аffects performаnce. Kinyuа
(2014) in his study on fаctors аffecting the performаnce of SMEs in the Juа Kаli
sector in Nаkuru town findings reveаled mаnаgement skills, ; mаcro environment
were found to positively аnd significаntly аffect performаnce of SMEs whereаs did
not hаve а significаnt effect on performаnce of SME’s. The study аlso estаblished thаt
40
number of yeаrs in the industry аlso influences performаnce. Murigi., (2014) in her study
on the effect of finаnciаl аccess on the finаnciаl performаnce of smаll аnd micro
enterprises in mukuru slums The size of the SME аnd the аge were found to hаve
positive аnd significаnt effect on finаnciаl performаnce.
Аccording to Аntony (2012), in his reseаrch on determinаnts of credit rаtioning to the
privаte sector in Ghаnа findings reveаled thаt lаck of mаnаgeriаl skills, equipment аnd
technology, regulаtory issues аnd lаck of cаpitаl аffects firm’s finаnciаl performаnce.
Kipeshа (2013) in his reseаrch on impаct of size аnd аge on firm performаnce: evidences
from microfinаnce institutions in Tаnzаniа. It wаs noted thаt аge of а firm hаs а positive
impаct on sustаinаbility, revenue level аnd efficiency but it hаs а negаtive effect on
profitаbility of а firm. However, firm size hаs аn impаct on the performаnce of the firm.
Аlmаjаli аnd АlаmroАl-Soub (2012) in their study on fаctors аffecting the finаnciаl
performаnce of Jordаniаn insurаnce compаnies listed аt Аmmаn stock exchаnge it wаs
estаblished thаt liquidity, size, leverаge аnd mаnаgement competence hаs а significаnt
impаct on the firm’s performаnce whereаs аge hаs no impаct on the firm’s performаnce.
The findings reveаled thаt respondents hаve not undergone trаining to help them run the
business. Other scholаrs suggest thаt trаining should be done. For instаnce, Kinyuа
(2014) in her study on fаctors аffecting the performаnce of smаll аnd medium enterprises
in the juа kаli sector in Nаkuru findings reveаled thаt mаnаgement skills were found to
positively аnd significаntly аffect performаnce of SMEs; mаcro environment fаctors
were found to significаntly аffect performаnce аnd Infrаstructure did not significаntly
аffect performаnce of SMEs in the study аreа. Kаmunyu аnd Theuri (2017) in their
study on fаctors аffecting growth of women owned smаll аnd medium enterprises in
Kenyа it wаs estаblished thаt inаdequаte cаpitаl, lаck of business skills аnd lаck of аccess
аre fаctors thаt аffect growth of women owned SMEs. Kаmunge, Njeru аnd Tirimbа
(2014) in their study on fаctors аffecting the performаnce of smаll аnd micro enterprises
in Limuru Town Mаrket of Kiаmbu it wаs reveаled thаt mаnаgeriаl skills аnd experience
hаs аn effect on performаnce of аn orgаnizаtion
41
5.4 Conclusion
5.4.1 SME’s Profile аnd Аccess to Credit
The study concluded thаt SME’s Profile аffected аccess to credit аnd similаrly, before
getting аccess to the loаns аge of owner/mаnаger influence аccess to finаnce. Despite the
chаnges in the SME profile, аs fаr а аccess to bаnk credit is concerned, women аre still
mаrginаlized. Educаtion levels аre very vitаl with regаrd аccess to finаnce, in аddition for
success of the SMEs knowledge аnd skills to run the business аre аlso very vitаl
аttributes.
5.4.2 Collаterаl аnd Аccess to Finаnce
The findings reveаled thаt commerciаl bаnks require collаterаl before issuing а loаn to
smаll аnd medium enterprises. SMEs hаve fаiled secure due to lаck of collаterаl. The dаtа
given by loаn аpplicаnts аlso plаys а pаrt in influencing loаn. It is not certаin thаt SMEs
keep good аccounting records, however proprietors аdmit to issuing аccurаte finаnciаl
informаtion to the bаnk before аpplying for а loаn. SMEs hаve been аble to аccess
аdequаte informаtion from the bаnk regаrding loаn аnd the repаyment depend on the
type аnd size of loаn.
5.4.3 Finаnciаl Performаnce аnd Аccess to Finаnce
Lаck of finаnce аnd mаnаgement skills cаn be а hinderаnce to business performаnce. In
аddition, lаck of аffects performаnce. Use of аdvаnced technology cаn be аpplied to
increаse performаnce. There is а lаck of аmple trаining to help them entreprenures in the
running of the business.
5.5 Recommendаtions
5.5.1 Recommendаtion for Improvement
5.5.1.1 SME’s Profile аnd Аccess to Credit
Bаnks should customize the policies to cаter for loаn аccess by SMEs аnd to ensure thаt
аge of owner/mаnаger does not impede the аccess to finаnce. Bаnks should аlso creаte
poroducts thаt enаble women increаse аccess to credit. Finаnciаl institutions need to
orgаnize seminаrs аnd trаinings to offer finаnciаl educаtion to SME’s. The enterprises
аlso needs to be encourаged to keep proper finаnciаl records.
42
5.5.1.2 Collаterаl аnd Аccess to Finаnce
SMES ought to strive аs much аs possible to аttаin аssets thаt cаn be used аs collаterаl in
the course of business. The enterprises аlso need to hounour аny debts owed in order to
improve their аccess to finаnce. Аt the sаme time, the firms need to ensure thаt they issue
аccurаte finаnciаl informаtion to the bаnk before аpplying for а loаn in order to
minimize cаses of informаtion аssymetry. Before undertаking а loаn, it is аdvised thаt the
lenders received аdequаte informаtion from the bаnk regаrding loаn they issue аs the
type аnd size of loаn аffects repаyment.
5.5.1.3 Finаnciаl Performаnce аnd Аccess to Finаnce
Mаnаgement need to ensure they hаve the necessаry skills for effective orgаnizаtion
performаnce. There is аlso а need for the enterprises to аdvаnced technology in order to
gаin competitive аdvаntаge. The mаnаgers should be proаctive in seeking trаining
opportunities.
5.5.2 Recommendаtion for Further Studies
Bаsed on the findings in the present study, А compаrаtive study ought to be cаrried out to
exаmine fаctors influencing credit аccess аmong SMEs in Nаirobi County. Further
reseаrch on both lаrge аnd smаll enterprises in Kenyа in order to аnаlyze the existing
discrepаncies between the two аnd therefore bridge the finаncing gаps thаt exist.
43
REFERENCES
Aabii, M. (2014). The Pecking Order Theory and SME s Financing: Insight into the
Mediterranean Area and a Study in the Moroccan Context Myers. Journal of
Small Business and Enterprise Development, 14 (4), 27 – 43
Abdesamed, K.H. & Abd Wahab, K. (2012) Do Experience, Education and Business Plan
Influence SMEs Start-Up Bank Loan? The Case of Libya. Australian Journal of
Basic and Applied Sciences, 6, 234-239
Abdulsaleh, A. M. & Worthington A. C (2013). Small and medium-sized enterprises
financing: A review of literature. International Journal of Business and
Management,. 8(14): p. 36.
Abo, R., & Ghimire, B. (2013). An Empirical Investigation of Ivorian SMEs Access to
Bank Finance: Constraining Factors at Demand-Level. Journal of Finance and
Investment Analysis, 2(4), 29-55
Aduda, J., Githinji, M. W.& Magutu, P.O. (2012). The Relationship between Credit
Scoring Practices by Commercial Banks and the Access to Credit by Small
and Medium Enterprises in Kenya. International Journal of Humanities and
Social Science, 2 (9), 203-213
Akinyi, S., I. (2012). The effect of bank financing on the financial performance of small
and medium-sized enterprises in Nairobi County. Unpublished Thesis Submitted
to University of Nairobi
Allen, F., Chakrabarti, R., De, S., Qian, J. Q., & Qian, M. (2012). Financing firms in
India. Journal of Financial Intermediation, 21 (3), 409 ‐ 445.
Allen, F., Chakrabarti, R., De, S., Qian, J. Q., &Qian, M. (2012). Financing firms in
India. Journal of Financial Intermediation, 21 (3), 409 ‐ 445.
Almajali and AlamroAl-Soub (2012
Amo, C., Ngenoh, E., Koech, W. & Bett, J. (2015). Determinants of Access to Credit
Financial Services by Smallholder Farmers in Kenya. Journal of Development and
Agricultural Economics 7 (9) 303-313.
44
Andoh, F. K. & Nunoo, J., (2012, August). Sustaining small and medium enterprises
through financial service utilization: Does financial literacy matter. In
Unpublished Paper) presented at the Agricultural & Applied Economics
Association’s 2012 AAEA Annual Meeting, Seattle, Washington.
Anthony K. A. & Frank G. S. (2013). Determinants of credit rationing to the private
sector in Ghana. African Journal of Business Management. 7(38), 3864-3874, 14
Antony (2012),
Apiri, T.R. (2013). Loan performance and default rate of financing SMES by
microfinance bank: A case study of Accion Microfinance Bank Plc. Master of
Development Finance at University of Stellenbosch.
Asiedu, E., Freeman, J. & Nti-Addae, A. (2012), Access to credit by small businesses.
International Journal of Finance and Accounting, 1(1), 8-17.
Atsmegiorgis (2013)
Atupele (2013)
Azende, T. (2012). Risk management and insurance of small and medium scale
enterprises (SMEs) in Nigeria. International Journal of Finance and Accounting,
1(1), 8-17.
Beck, T., Demirgüç-Kunt, A., & Singer, D. (2013). Is small beautiful? Financial structure,
size and access to finance. World Development, 52, 19-33
Bonfim and Daniel (2012
Bouazza, A., Ardjouman, D & Abada, O. (2015) Establishing the Factors Affecting
the Growth of Small and Medium-sized Enterprises in Algeria. American
International Journal of Social Science. 4(2), 103-105.
Brixiova, Z. (2010). Unlocking Productive Entrepreneurship in Africa's Least Developed
Countries, African Development. Review/Revue Africaine de Development, 22(3),
440-445.
45
Burindu . E. M (2015). The Effect of Capital Structure on The Financial Performance of
Smes in Thika Sub County. International Journal of Humanities and Social
Science. (5) 151-155.
Canepa, A., & Stoneman, P. (2007). Financial constraints to innovation in the UK:
evidence from CIS2 and CIS3. Oxford Economic Papers 60(4):711–30.
Canton, E.J.F., Grilo, I., Monteagudo, J. & Van der Zwan, P. (2012) Perceived Credit
Constraints in the European Union. Erasmus Research Institute of Management
(ERIM), ERIM Report Series Research in Management ERS-2010-001-ORG,
Rotterdam, 29 October 2012.
CDE (2013)
Charbonneau, J., & Menon, H. (2013). A strategic approach to SME exports growth. The
Section of Enterprise Competitiveness- ITC. Taipei-Taiwan: Secretariat,
Confederation of Asia-Pacific Chambers of Commerce and Industry..
Charbonneau, J., &Menon, H. (2013).A strategic approach to SME exports growth. The
Section of Enterprise Competitiveness- ITC. Taipei-Taiwan: Secretariat,
Confederation of Asia-Pacific Chambers of Commerce and Industry.
Chinaemerem and Anthony (2012)
Coad, A., & Rao, R. (2008). Innovation and firm growth in high-tech sectors: A quantile
regression approach. Research Policy 37(4):633–48.
Comptroller and Auditor General, (2013). Improving access to finance for small and
medium-sized enterprises. National Audit office. HC 734 Session 2013-14
Cooper & Schindler, 2012).
Cooper, D. R., & Schindler, P. S. (2014). Business research methods.12th Ed.New York,
NY: McGraw-hill education.
Czarnitzki, D. (2006). Research and development in small and medium-sized enterprises:
The role of financial constraints and public funding. Scottish Journal of Political
Economy 53(3):335–57
46
DeYoung, R., Glennon, D., Nigro, P., & Spong, K. (2012). Small business lending and
social capital: are rural relationships different?. University of Kansas Center for
Banking Excellence Research paper, 1.
Drucker, 2014
Edward, N. & Newton, N. (2015). Basic and Applied Research Formal Conditions that
Affect Agricultural Credit Supply to Small-scale Farmers in Rural Kenya: Case
Study for Kiambu County. International Journal of Sciences: Basic and Applied
Research, 20 (2) , 59-66
Enterprises in Kenya in Achievement of Kenya's Vision 2030. Journal of US-China
Public Administration, 9 (12), 1432-1440
Essay 2012
Fletschner, D., & Kenney, L. (2014). Rural women’s access to financial services: credit,
savings, and insurance. In Gender in agriculture . Springer Netherlands.
Freel, M. S. (2007). Are Small Innovators Credit Rationed? Small Business Economics
28(1):23–35.
FSD Kenya . (2015). Finaccess Business-Supply: Banking Financing of SMEs in Kenya
.Nairobi : FSD Kenya
FSD Kenya. (2015). Fin access Business-Supply: Banking Financing of SMEs in Kenya
.Nairobi : FSD Kenya
Gangata, K., & Matavire, E. H. M. (2013). Challenges facing SMEs in accessing finance
from financial institutions: The case of Bulawayo, Zimbabwe. International
Journal of Applied Research and Studies (iJARS) ISSN, 2278-9480.
Gharaibeh, A. M. (2015). The Effect of Capital Structure on Financial Performance of
Listed Companies in the Bahrain Bourse. Journal of Finance and Accounting. 3,
(3), 50-60
Gichuki, J. A. W., Njeru, A., & Tirimba, O. I. (2014). Challenges facing micro and
small enterprises in accessing credit facilities in Kangemi Harambee Market
in Nairobi City County. International Journal of Scientific and Research
Publications, 4(12),1-2
47
Gitman, L. J., Joehnk, M. D., Smart, S., & Juchau, R. H. (2015). Fundamentals of
investing. Pearson Higher Education AU.
Gitman, L. J., Joehnk, M. D., Smart, S., & Juchau, R. H. (2015). Fundamentals of
investing. London, UK: Pearson Higher Education AU.
Government of Kenya. (2012). SME Act. Retrieved on June 114th 2017 from
http://kenyalaw.org/lex//actview.xql?actid=No.%2017%20of%202012
Government of Kenya.(2012). SME Act. Retrieved on June 14th 2017 from
http://kenyalaw.org/lex//actview.xql?actid=No.%2017%20of%202012
Hansah et al 2013
Hansen A, Kimeria C, Ndiragu B, Oshn N & Wendle J. (2012).assessing credit
guarantee schemes for SMEs finance in Africa evidence from Ghana, Kenya,
South Africa and Tanzania. South Africa: Dalberg global development advisors.
Hansen A, KimeriaC, Ndiragu, B.,Oshn, N. &Wendle J. (2012). assessing credit
guarantee schemes for SMEs finance in Africa evidence from Ghana,Kenya,
South Africa and Tanzania. South Africa: Dalberg global development advisors.
Haron, Said, Jayaraman, and Ismail, (2013)
Hezron & Hilario 2016
Hussain (2012
IFC (2013) IFC Issue Brief/Small and Medium Enterprises. Washington DC.
International finance corporation (2013). Small and medium enterprise finance:
new findings, trends and G-20/global partnership inclusion progress. Washington
DC: World Bank.
International finance corporation (2013). Small and medium enterprise finance: new
findings, trends and G-20/global partnership inclusion progress. Washington DC:
world bank.
Javed, B. & Akhtar, S. (2012). Interrelationships between Capital Structure and Financial
Performance, Firm Size and Growth: Comparison of industrial sector in KSE:
European Journal of Business and Management, 4(15), 148-157
48
Jessop, R., Diallo, B., Duursma, M., Mallek, A., Harms, J., & van Manen, B. (2012).
Creating access to agricultural finance based on a horizontal study of Cambodia,
Mali, Senegal, Tanzania, Thailand and Tunisia. Paris, AFD, A savoir.
Jokorvic, M. (2014). Factors Affecting Growth of SMEs in Gatundu Region North
Sub-county. Germany: GRIN Verlag
Joseph, K. (2013). Financing small and micro enterprises in Ghana. Challenges and
determinant in accessing bank credit. Ghana. MBA Thesis Ghana University.
Joseph, Kofin, Fanyel and Gaeten (2013)
Kamunge, Njeru and Tirimba (2014)
Kamunyu and Theuri (2017
Karanja (2014)
Karanja, J. G., Mwangi, A. K., & Nyakarimi, S. N. (2014). Analysis of Factor
Influencing Access to Credit Services by Women Entrepreneurs in Kenya.
Research Journal of Finance and Accounting, 5 (11), 1-10.
Karanja, J. G., Mwangi, A. K., &Nyakarimi, S. N. (2014). Analysis of Factor
Influencing Access to Credit Services by Women Entrepreneurs in Kenya.
Research Journal of Finance and Accounting, .5(11), 1-10.
Kehinde, J. S. (2013). Capital structure: earning and the performance options in small and
medium scales enterprises. European Scientific Journal.
Khan & Jain, 2014
Kiboki, A., Sakwa, M., & Kirago, A. (2014). The Relationship between Small Scale
Enterprises Performance and Access to Credit from Microfinance Institutions in
Mount Elgon Constituency, Kenya. International Journal of Academic Research
in Business and Social Sciences, 507-519
Kiboki, A.,Sakwa, M., &Kirago, A. (2014). The Relationship between Small Scale
Enterprises Performance and Access to Credit from Microfinance Institutions in
Mount Elgon Constituency, Kenya. International Journal of Academic Research
in Business and Social Sciences, 507-519
49
Kibosia, N. C. (2012). Determinants of Loan Defaults by Small and Medium Enterprises
among Commercial Banks in Kenya. Unpublished Thesis Submitted to
University of Nairobi
Kihimbo, B. W., Ayako, B. A., & Omoka, K. w. (2012). Collateral requirements for
financing of small and medium enterprises (SMEs) in Kakamega municipality in
Kenya. International Journal of current Research, 4(6), 21–26
Kinyua., A. (2014). Factors Affecting the Performance of Small and Medium Enterprises
in the Jua Kali Sector In Nakuru Town, Kenya. Journal of Business and
Management, 16, (1). 80-93
Kipesha (2013)
Kira and Zhongzhi (2012)
Kira, A. R. (2013) The Evaluation of the Factors Influence the Access to Debt
Financing by Tanzanian SMEs. European Journal of Business and
Management,5, 1-24.
Kira, A. R., & He, Z. (2012). The impact of firm characteristics in access of financing by
small and medium-sized enterprises in Tanzania. International Journal of
Business and Management, 7(24), 108.
Kisaka, E. S., & Mwewa, N. M. (2014). Effects of micro-credit, micro-savings and
training on the growth of small and medium enterprises in Machakos County in
Kenya. Research Journal of Finance and Accounting, 5(7), 43-49.
Kisaka, E. S., &Mwewa, N. M. (2014). Effects of micro-credit, micro-savings and
training on the growth of small and medium enterprises in Machakos County in
Kenya. Research Journal of Finance and Accounting, 5(7), 43-49.
Kithae, P. P., Gakure, R. W., &Munyao, L. M. (2012). The Place of Micro and
Small Enterprises in Kenya in Achievement of Kenya's Vision 2030.Journal of US-China
Public Administration, 9(12), 1432-1440.
Kombo., D. & Tromp., L. (2006). Proposal and thesis writing: An Introduction. Nairobi,
KE: Pauline’s Publications Africa.
Korankye (2014
50
Kothari, C.R (2014). Research Methodology: Methods and Techniques New Delhi, New
Delhi: New Age International
Kyule, C. M. &Ngugi, K. (2014). Influence of Capital Structure on Leverage of Small
and Medium Size Enterprises in Kenya, European. Journal of Business
Management, 1(11), 1-22
Levy (2015)
Machirori, T., & Fatoki, O. (2013). The impact of networking on access to debt finance
and performance of small and medium enterprises in South Africa. Journal of
Economics, 4(2), 97-104.
Madafu, E. G. (2015). Access to bank credit by smallholder farmers In Tanzania:
Challenges, opportunities and prospects A case of Mvomero district. Unpublished
Thesis Doctoral Dissertation, Mzumbe University.
Makorere, R. (2014). Factors affecting loan repayment behaviour in Tanzania: Empirical
evidence from Dar es Salaam and Morogoro regions. International Journal of
Development and Sustainability 3(3), 481-492
Mazanai, M. & Fatoki, O. (2012), “Access to Finance in the SME sector: A South
African Perspective”, Asian Journal of Business Management,. 1, 58-6
Mazzucato, M. (2013). Financing innovation: creative destruction vs. destructive creation.
Industrial and Corporate Change, 22(4), 851-867
Mensah, S. O., & Agbekpornu, H. (2013). Determinants of Access to credit by
Agribusiness Operators in the Kumasi Metropolis, Ghana. American Journal of
Experimental Agriculture, 6 (5) 333-346
Mira, G. K. & Ogollah, K. (2013). Challenges facing accessibility of credit facilities
among women owned enterprises in Nairobi Central Business District in Kenya.
International Journal of Social Sciences and Entrepreneurship, 1 (7), 3 77 – 396
Mira, G. K. &Ogollah, K. (2013). Challenges facing accessibility of credit facilities
among women owned enterprises in Nairobi Central Business District in Kenya.
International Journal of Social Sciences and Entrepreneurship, 1 (7), 3 77 – 396
51
Mokua, K. (2013). Factors influencing credit financing of small scale business
enterprises, in Kisii County, Kenya. Unpublished MBA Project, University of
Nairobi
Monteiro, D. (2013). The flow of credit in the UK economy and the availability of
financing for the corporate sector. Economic Papers 509/ December 2013, 19-20.
Mugenda, A & Mugenda, O. (1999).Research methods dictionary. Nairobi, Kenya arts
press.
Mugenda, A &Mugenda, O. (2012).Research methods dictionary. 3RD Ed. Nairobi, Kenya
arts press.
Mugo, W. L., (2012). Factors Affecting Entrepreneurs’ Performance in Kenya: A Case of
Nairobi Women Groups in the Central Business District:, University of Nairobi,
2012
Muiru, M. & Kamau, S. M. (2014). An Assessment of Capital Structure Decisions
by Small and Medium Enterprises in Kenya, Research Journal of Finance and
Accounting, 5(15), 20-27
Mukiri, W. G. (2008) Determinants of Access to Bank Credit by Micro and Small
Enterprises in Kenya. Growing Inclusive Markets Conference. . Unpublished
MBA Project, University of Nairobi
Mukono., A (2015). Determinants of loan repayment by small and medium enterprises in
Nairobi county, Kenya. Unpublished Thesis Submitted to University of Nairobi
Mulandi, B. M. (2013). Factors influencing access to credit in the Renewable
Energy Sector: The Case of Biogas in Kenya. Unpublished thesis Submitted to
University of Nairobi
Muratha, A. (2015). Anchoring bias in relationship between objective and subjective
probability. Psychol. Res.4(12), 936–943 (2014)
Murigi., M. (2014). The effect of financial access on the financial performance of small
and micro enterprises in Mukuru slums. Unpublished Thesis Submitted to
University of Nairobi
Muturi, W., & Ogubazghi, S. K. (2014). The Effect of Age and Educational Level of
Owner/Managers on SMME's Access to Bank Loan in Eritrea: Evidence From
52
Asmara City. American Journal of Industrial and Business Management, 4(11),
632-643.
Mwangangi S. M. (2014). An Analysis of the Efficacy of Borrower Credit Scores in
Predicting Credit Repayment Performance: A Case Study in Agricultural Finance
Corporation. Unpublished thesis Submitted to University of Nairobi
Mwongera, R. K. (2014). Factors influencing access to Microfinance Credit by
Young WomenEnterpreneurs' Projects in Athi-River, Machakos County, Kenya
Unpublished Doctoral dissertation submitted to University of Nairobi
Mwongera, R. K. (2014). Factors influencing access to micro-finance credit by young
women entrepreneurs’ projects in Athiriver, Machakos county, Kenya. University
of Nairobi.
Nabintu, N. (2013). Factors affecting the performance of small and micro enterprises
(SMEs) traders at city park hawkers market in Nairobi County. Kenya (Doctoral
dissertation).
Nairobi County (2015). About Us. Retrieved on 19thjuly 2017 form http:// www.
nairobi. go. ke/home/about-the-county/#agriculture
Nanyondo, M., Tauringana, V., Kamukama, N., & Nkundabanyanga, S. (2014). Quality
of financial statements, information asymmetry, perceived risk and access to
finance by Ugandan SMEs. International Journal of Management Practice, 7(4),
324-340
Nawai, N. & Shariff, M. (2013). Factors Affecting Repayment Performance in
Microfinance Programs in Malaysia. Procedia - Social and Behavioral Sciences
62(24):806-811
Ndungu., C. (2014). Factors affecting credit access among small and medium enterprises
in Murang’a county. Unpublished thesis submitted to University of Nairobi
Nene, D. M. (2014). An Evaluation of the Main Factor Affecting Credit Repayment in
Small and Medium Enterprises: A Case of Nairobi County. Unpublished Thesis
Submitted to University of Nairobi.
53
Nguta,H.M&Huka,G.S (2013). Factors Influencing Loan Repayment Default in Micro-
Finance Institutions: The Experience of Imenti North District, Kenya
Nguyen, N., & Luu, N. T. H. (2013). Determinants of Financing Pattern and Access to
Formal-Informal Credit: The Case of Small and Medium Sized Enterprises in Viet
Nam. Journal of management research, 5(2), 240-259.
Nirajini, A. & Priya, B. (2013). Impact of Capital Structure on Financial Performance of
the Listed Trading Companies in Sri Lanka. International Journal of Scientific and
Research Publications, 3(5), 1-9.
Njagi., I, Kimani M., & Kariuk., S (2017). Equity financing and financial performance
of small and medium enterprises in Embu town, Kenya. International Academic
Journal of Economics and Finance, 2, (3), 74-91
Nkuah, J.K., & Gaeten, K. (2013). Financing small and medium enterprises (SMEs) in
Ghana: challenges and determinants in accessing bank credit, International
Journal of Research in Social Sciences, 2 (3), pp. 12-25.
Ntakobajira, N. (2013). Factors affecting the performance of Small and Micro
Enterprises (SMEs) Traders at City Park Hawkers Market in Nairobi County,
Kenya. Nairobi, Kenya.
Ntakobajira, N. (2013). Factors affecting the performance of Small and Micro
Enterprises (SMEs) Traders at City Park Hawkers Market in Nairobi County,
Kenya. Nairobi, KE: MBA Thesis University of Nairobi..
Nyagah, C., (2013). Non-financial constraints hindering growth of SME’S in Kenya: the
case of plastic manufacturing companies in industrial area in Nairobi County.
Kenyatta University MBA project
Nyamboga, T. O., Nyamweya, B. O., Abdi, M. A., Njeru, F. & Gongera, E. G. (2014). An
Assessment of Financial Literacy on Loan Repayment by Small and Medium
Entrepreneurs in Ngara, Nairobi County. Research Journal of Finance and
Accounting, 5 (12), 181-192
Nyangweso, J. (2013). Relationship between Credit information Sharing and Loan
Performance, case of commercial Banks in Kenya. Unpublished MBA Research
Paper.
54
O’Gorman, K., &MacIntosh, R. (2014).Research methods for business & management: A
guide to writing your dissertation. Oxford:Good fellow
Ochanda, M. M.(2014). Effect of financial deepening on growth of small and medium-
sized enterprises in Kenya: A case of Nairobi County. International Journal of
Social Sciences and Entrepreneurship, 1 (11), 191-208
Ochung, K. (2013). Factors Affecting Loan Repayment Among Customers Of
Commercial Banks In Kenya: A Case Of Barclays Bank Of Kenya, Nairobi
County. Unpublished Thesis Submitted to University of Nairobi
Oginda, S. (2013). Effect of capital structure on financial performance of firms listed at
the Nairobi securities exchange. Unpublished Thesis Submitted to University of
Nairobi
Ogubazghi, S.-K. & Muturi, W. (2014) The Effect of Age and Educational Level of
Owner/Managers on SMMEs’ Access to Bank Loan in Eritrea: Evidence from
Asmara City. American Journal of Industrial and Business Management, 4(2),
632-643.
Okonya, J. S., & Kroschel, J. (2014). Gender differences in access and use of selected
productive resources among sweet potato farmers in Uganda. Agriculture & Food
Security, 3(1), 1-10.
Olanrewaju, A., Ansary, J., & Agumba, W. (2016). Determinants Predicting Credit
Accessibity within Small and Medium-Sized Enterprises in the South African
Construction Industry. Creative Construction Conference. University of
Johannesburg, Johannesburg, South Africa
Olekamma, K., & Tang, Z. (2016). The Influence of Entrepreneurial Characteristics on
Small and Medium-Sized Enterprise Accessibility to Debt Finance in Nigeria.
International Journal of Managerial Studies and Research, 4, (10)
Olowe, F. Moradeyo, O. & Babalola, M. (2013). Empirical Study of the Impact of
Microfinance Bank on Small and Medium Growth in Nigeria. Retrieved from
DOI: 10.6007/IJAREMS/v2-i6/465
Olugbenga, A. A. (2012). Exchange Rate Volatility and Stock Market Behaviour: The
Nigerian Experience. European Journal of Business and Management 4(5), 31-41
55
Ongena, S., & Popov, A. A. (2015). Gender bias and credit access.. European central
bank Working Paper. No 1822
Ongolo, D., &Awino, S. (2013). Small and Medium Enterprises and Devolved
Government System: an Assessment of the Regulatory and Institutional
Challenges Affecting the SMEs Development in Kenya. Nairobi, KE: Centre for
International Trade Economics and Environment
Opondo, Kasekende. (2012). Financing SMEs in Uganda-Constraints.Retrieved from
http//www.bou.or.ug/research department
Osano, H. M., & Languitone, H. (2016). Factors influencing access to finance by SMEs
in Mozambique: case of SMEs in Maputo central business district. Journal of
Innovation and Entrepreneurship, 5(1), 13.
Osano, H. M., &Languitone, H. (2016). Factors influencing access to finance by SMEs
in Mozambique: case of SMEs in Maputo central business district. Journal of
Innovation and Entrepreneurship, 5(1), 13.
Osoro, K., & Muturi, W. (2013). The role of micro financial institutions on the growth of
SMEs in Kenya: A case study of micro financial institutions in Kisi Town. IOSR
Journal of Humanities and Social Science, 16 (1), 2279-0845.
Osoro,K.,&Muturi, W. (2013). The role of micro financial institutions on the growth of
SMEs in Kenya: A case study of micro financial institutions in Kisi Town. IOSR
Journal of Humanities and Social Science, 16 (1), 2279-0845.
Oyen.V. L & Gedi L. (2012). Tanzania SMEs development policy 2003 "ten years
after" implementation review. United Nation Industrial Development Organization
(UNIDO).
Rambo, C. M. (2013). Time required to break-even for small and medium enterprises: the
Evidence from Kenya.The International Journal of Marketing Research and
Management, 6(1), 81-94.
Roshanak, H. (2013). The study of the Impact of Capital Structure Determinants
on Small and Medium size Enterprise Leverage in Iran. Unpublished MBA
Thesis, Soderton University
56
Salazar, L. A., Soto, C. R. & Mosqueda, E. R (2012). The Impact of Financing
Decisions and Strategy on Small Business Competitiveness. Global Journal of
Business Research, 6(2), 93-103
Saunders, M. (2012).Research Methods for Business Students.6th Ed. Edinburgh, Harlow:
Pearson Education Ltd.
Saunders, M. (2015).Research Methods for Business Students. 7th Ed. UK, UK:Pearson
Education Limited.
Sebhatu, K. & Willy, M. (2014). The Effect of Age and Educational Level of
Owner/Managers on SMMEs’ Access to Bank Loan in Eritrea: Evidence from
Asmara City. American Journal of Industrial and Business Management, 2014, 4,
632-643
Sekaran, U. &Bougie, R. (2013). Research Methods for Business: A Skill Building
Approach.6thed. New Jersey, New Jersy: John Wiley and Sons.
Selamawit N., & Kebede A. (2014). Determinants of Micro and Small Enterprises’
Access to Finance. Developing Country Studies, .4 (21) 90-103
Shirley, K. & Namusonge, T.(2013). Transformational leadership, transactional
leadership, locus of control, and support for innovations: key predictors of
consolidated-business-unit performance. Journal of Applied Psychology;78(6):
891– 903.
Slavec, A. & Prodan, I. (2012) The Influence of Entrepreneur’s Characteristics on
Small Manufacturing Firm Debt Financing. Journal for East European
Management Studies, 17, 104-13
SME Act, (2012). SME Act. Retrieved on 19th June 2016 from
kenyalaw.org/.../Acts%20and%20Regulations/.../Micro%20and%20Small%20Ent
erprice
Subhan. Q. A, Mehmood. M. R & Sattar, A. (2013). Innovation in Small and Medium
Enterprises (SME‟s) and its impact on Economic Development in Pakistan.
Proceedings of 6th International Business and Social Sciences Research
Conference, 3 – 4 January, 2017, Dubai, UAE, ISBN: 978-1-922069-18-4 1.
Retrieved on 11-09-2017 http://s cholar.goo gleusercontent. com/scholar?q=cache
57
Thébaud, S., & Sharkey, A. J. (2016). Unequal hard times: The influence of the great
recession on gender bias in entrepreneurial financing. Sociological Science, 3, 1.
Ubon, A. E., & Chukwuemeka, J. A. (2014). An analysis of Access to Credit Markets
and the Performance of Small Scale Agro-Based Enterprises in The Niger
Delta Region of Nigeria. International Journal of Food and Agricultural
Economics, 105-120.
Umar, M., Tanveer, Z., Aslam, S., & Sajid, M. (2012). Impact of Capital Structure on
Firms’ Financial Performance: Evidence from Pakistan. Research Journal of
Finance and Accounting, 3 (9)1-19.
UNIDO (2013).Tanzania SME Policy review.Final Mutabi J 2013 report:
Implementation review nov 2012
Waweru, D. (2016). factors that affect access to credit finance by small scale women
entrepreneurs in Gilgil sub county, Nakuru County-Kenya. Nairobi, KE:
University of Nairobi.
World Bank (2013) Scaling-Up SME Access to Financial Services. Washington, DC:
World Bank.
Zarook, T., Mohammad, M. & Rasheda, K. (2013). The Impact of Demographic Factors
on Accessing Finance in Libya’s SMEs. International Journal of Business and
Management, 8 (14), 55-65
Zeth, P. (2015). Analisa Kebutuhan Bahan Baku dan Biaya Produksi Furnitur Berbahan
KayuKelapa di Kota Tobelo (Studi Kasus pada CV. CSS di Tobelo, Halmahera
Utara)
Zhou, A. (2015). Access to finance: The effect of financial constraints on private firms'
performances in China. Georgetown University.
Zikmund and Babin (2012)
58
APPENDIX I: Introduction Letter
Abdifatah Adan Mumin
P.O Box 14634-0000
Nairobi,
KENYA
Dear Respondent,
Re: Data collection for research study
I am a student at United States International University. I am conducting an investigation
investigate factors affecting SME’s access to credit or finance from commercial banks in
Kenya. Please answer the following questions honestly and objectively to the best of your
knowledge, the information obtained will be treated with strict confidentiality. Please do
not write your name on the questionnaire.
Thank you for your acceptance and support.
Yours faithfully
Abdifatah Adan Mumin
59
APPENDIX II: Questionnaire
SECTION A: DEMOGRAPHIC FACTORS
Please tick the most appropriate answer (√ )
1. Age
18-25 yrs
26-30yrs
31-39yrs
40 yrs and Above
2. Gender
Male Female
3. Marital status
Single Married Divorced Widowed
4. What is your highest education level?
Certificate Degree PHD
Diploma Masters
60
5. Number of years you have been in business?
Less than 1 year 2-4 years 5-9 years above 10 years
6. Have you ever applied for a loan? Yes NO If no state why
7. Indicate type of financing have you accessed. Please tick where necessary
Bank Loan
Informal
Personal
Loan from friends and family
SECTION B: SME’s Profile and Its Effect Its Access to Credit
Please indicate your opinion as per the level of disagreement or agreement with the
outline statement using 1 to 5 scale guideline. 1= Strongly Disagree 2- Disagree, 3=
Neutral, 4 =Agree, 5= Strongly Agree
SD D N A SA
1 Age of owner/manager affects access to finance
2 Men can easily access loan as compared to women
3 Women are frequently discouraged to apply for bank
credit
4 Level of education affects SME’s access to finance
5 I have knowledge and skills to run the business
6 capital investment, financial records,
61
SECTION C: Collateral and Access to Finance
Please indicate your opinion as per the level of disagreement or agreement with the
outline statement using 1 to 5 scale guideline. 1= Strongly Disagree 2- Disagree, 3=
Neutral, 4 =Agree, 5= Strongly Agree
SD D N A SA
1 Banks require collateral before issuing a loan
2 I have been denied loan due to lack of collateral
3 Creditworthy information influences access to finance
4 I keep good accounting records
5 I give accurate financial information to the bank
before applying for a loan
6 I receives adequate information from the bank
regarding loan they issue
7. Type and size of loan affects repayment
8. Period of repayment does not affect repayment of the
loan
SECTION D: Financial Performance and Access to Finance
62
Please indicate your opinion as per the level of disagreement or agreement with the
outline statement using 1 to 5 scale guideline. 1= Strongly Disagree 2- Disagree, 3=
Neutral, 4 =Agree, 5= Strongly Agree
SD D N A SA
1 Lack of finance has affected my business
performance
2 Capital structure affects financial performance of an
organization
3 Lack of management skills affects performance
4 Use of advanced technology increase performance
5 I have undergone training that has helped me run the
business
6 I have enough capital to run my business
7. Size of a firm affects performance
SECTION E: Access to Finance
Please indicate your opinion as per the level of disagreement or agreement with the
outline statement using 1 to 5 scale guideline. 1= Strongly Disagree 2- Disagree, 3=
Neutral, 4 =Agree, 5= Strongly Agree
SD D N A SA
1 SMEs have knowledge on available finance services
2 Competent personnel influence financial access
3 SMEs need experience on finance access
4 Industry regulation influences access to finance
Thank you for your participation