Evaluation of Micro-Credit Finance on Financial Performance of Small and Medium Enterprises in Nakuru County, Kenya
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Date
2017
Authors
Mokua, Angela Kemuma
Ndede, Fredrick
Journal Title
Journal ISSN
Volume Title
Publisher
Imperial Journal of Interdisciplinary Research
Abstract
Small and Medium enterprises play an
increasing role in the contemporary knowledge
invention function as a conduit of economic
development. SME’s are the backbone of many
economies and notably a source of employment as
well as a major source of tax generation, provide
solutions to societal and growth problems such as
food security, besides entrepreneurship is a social
safety net for women and youth. Providing
monetary services to SMEs plays a crucial task in
determining how they carry out their businesses as
they require an array of enabling and supporting
financial services in order to enable them in actual
fact utilize profuse resources in their field of
specialty and to recognize their full potential. The
banking sector in Kenya over the years has
regarded the sector as risky and not viable
commercially. The research study objective was an
evaluation of micro-credit finance and financial
performance of Small and Medium Enterprises
(SMEs) Nakuru County, Kenya. The research
adopted a descriptive research design; the study
used a sample of 106 respondents out of whom 65
responded. Data analysis was done using SPSS
version 22.0. The study established that increase in
interest rates affected the financial performance of
SME’s to a great extent, The study also established
that strict credit policies affected access to credit
thus affecting the financial performance of SME’s.
The study also established income level of
entrepreneurs affected the financial performance
due to inability to finance the accessed credit. The
study concludes that micro credit banks in Nakuru
County are emphasizing on interest rate and
income capability to increase financial
performance. Based on the study it clearly
stipulates that sales per annum, initial capital
investment, total value of assets and net profit
measures the financial performance capability for
any SME’s businesses. The study recommends that
the management of micro finance banks should
take into consideration on interest rate and
particularly on how to lower the interest rates. This
enabled the management to create a
comprehensive understanding that can be
leveraged to influence more SME’s to take up loans
and thereby increase financial performance. The
study also recommends that government should
come up with rules and regulations to prevent the
customers from being exploited through high
interest rates and other incidental fees. This
enabled more customers to take up loans thereby
expanding their SME’s businesses. The study
recommends that the Management of banks and
other key players in monetary sectors should
formulate better policies that are favorable to small
and medium enterprises to enable them access
credit facilities easily.
Description
An Article Published in Imperial Journal of Interdisciplinary Research
Keywords
Interest rates, Income level, Financial performance