Fintech Startups: Can the Fintech Boom Address the Msmes Finance Gap in Kenya
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Date
2023
Authors
Wangondu, Wanja
Muathe, Stephen
Journal Title
Journal ISSN
Volume Title
Publisher
IJSSER
Abstract
MSMEs are considered the backbone of the Kenyan economy. However, they are considered too
risk by financial institutions. With the emergence and growth of Fintech in the country Fintech is
becoming more attractive to MSMEs as a source of credit, this is causing panic among the
financial institutions. The purpose of this study was to analyze the effect of Fintech boom on
mitigating of the Financial Gap among MSMEs in Kenya. The study was anchored on
Constraint-Induced Financial Innovation Theory, Diffusion of Innovations Theory, and
Traditional Theory of Financial Innovation. A desktop analysis of existing literature on Fintech
studies was used and from the analysis it was established that existing financial institutions deny
MSMEs financial support as they are considered too risky. However, with the Fintech boom in
Kenya the landscape is changing hence significantly narrowing the financial gap for MSMEs.
Moreover, the findings indicates that the percentage of underserved MSMEs has reduced as
many continued to expand their operation using funding from Fintech. It’s also observed that the
rise of Fintech start-ups has helped reduce the cost of credit in the local market.
Description
Article
Keywords
Business Incubators, Cost of Credit, Diffusion theory, Financial Inclusion, Fintech startups, MSMEs
Citation
Wangondu, W., & Muathe, S. FINTECH STARTUPS: CAN THE FINTECH BOOM ADDRESS THE MSMES FINANCE GAP IN KENYA.