RP-Accounting and Finance Department

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Browsing RP-Accounting and Finance Department by Subject "access to credit"

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    Credit Facilities and Growth of Large-Scale Sugarcane Farms in Migori County, Kenya
    (International Journal Corner, 2018) Otecko, David Okoth; Omagwa, Job
    Over the past decade, the sugar sector in Kenya has been facing decline with numerous sugar production companies forced to close down. One of the factors leading to the closure of the sugarcane factories is the low crushing level due to inadequate cane supply. Successive governments have put in place policies and measures to ensure growth in the levels of cane production with little or no results. The lack of growth in the production of sugarcane has been attributed to numerous factors with lack of access to credit facilities being one of the major challenges. The purpose of the study was to determine the effect of credit facilities on growth of large-scale sugarcane farms in Migori County, Kenya. The study was anchored on: life cycle theory, loan able funds theory, and the theory of financial intermediation. The study adopted descriptive cross-sectional research design. The target population of the study was all the large-scale sugarcane farmers in Migori County, Kenya. The study adopted purposeful sampling technique to pick respondents. The study collected data using questionnaires. The data was analysed using descriptive analysis and multiple linear regression analysis. The study found that the nature of credit had a positive but insignificant effect on growth. In addition, the study established that access to credit has a positive and significant effect on growth whereas the terms and conditions of credit were determined to have a negative and significant effect on the growth of large-scale sugarcane farms in Migori county, Kenya. The study concluded that the type of financial institution offering credit was not relevant to the growth of the farms; the farmers preferred long-term credit to finance their growth; the terms and conditions attached to loans and the processing of the loans were impediments to access to credit and subsequently curtailed borrowing.
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    The Moderating Role of Financial Innovations on the Relationship between Interest Rate Cap and Access to Credit by Micro, Small and Medium Enterprises in Kisumu County.
    (international journal of Accountibg and Finance(IJFA), 2022-03) Adhiambo, Osir Rosalyne
    Purpose: The purpose of this study was to investigate the moderating role of financial innovations on the effect of monetary interventions on access to credit by micro, small and medium enterprises in Kisumu County, Kenya. The specific objectives were to assess the effect of interest rate cap on access to credit by MSMEs and to investigate the moderating role of financial innovations on the effect of interest rate cap on access to credit by MSMEs in Kisumu. This study was guided by the Keynesian Liquidity Preference Theory. Methodology: The study adopted a descriptive research design with a target population of the 1,472 micro, small and medium enterprises registered at the Department of Social Services in Kisumu County, Kenya. At a confidence level of 95%, a representative sample of 420 MSMEs was obtained based on Yamane Taro’s formula. A closed ended questionnaire was administered to a stratified sample of the finance managers of the micro, small and medium enterprises. A Cronbach’s alpha of 0.801 confirmed the reliability of the instrument while its validity was assessed by expert opinion of finance professionals. Data was analyzed using regression analysis. Results: Results showed that interest rate cap had a statistically significant effect on access to credit by micro, small and medium enterprises. Further, financial innovations moderated the relationship between interest rate cap and access to credit. The study concluded that MSMEs’ access to credit depended on the direct and the hierarchical effects of interest rate cap and also that financial innovations moderated these effects. Unique contribution to theory, practice and policy: The study recommends that the MSMEs could save with commercial banks to enable them access credit made available through lower interest rates unlike those charged by MFIs. Also, they should take advantage of financial innovations at their disposal to enable them access credit cheaply and fast. The policy makers ought to aim at enhancing access to credit by employing sector specific interventions as opposed to blanket interventions like cushioning MSMEs from high interest rates by providing such funds as funds for inclusion of the informal sector (FIIS) and should also derive policies targeting on improving the process and role of financial innovations in the relationship between interest rate cap and access to credit by MSMEs in Kenya. The study supported the Keynesian liquidity preference theory by positing that interest rates are controlled by the rise and fall of supply and demand for money and should be allowed to adjust freely. This theory could therefore be applied to similar studies.