Firm Characteristics and Credit Access by Small and Medium Enterprises in Kirinyaga County, Kenya
Maina, Margaret Njeri
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Accessing credit is considered to be an important factor in increasing the development of SMEs. It is thought that credit access increase income levels, increases employment and thereby alleviates poverty. The biggest problem most SMEs face is credit access and statistics show that credit access by SMEs has been a problem which has been an unsolved issue faced by the majority SMEs. The general objective of the study was to establish firm characteristics and credit access by small and medium enterprises in Kirinyaga County, Kenya. The specific objectives of the study were to examine how location of the firm, firm’s collateral, age of the firm and how firm size influence credit access by small and medium enterprises in Kirinyaga County.The theories used in the study included Credit Rationing theory,Financial intermediation theory,Information asymmetry theory and Adverse selection theory.The descriptive research technique was used for this study. The population that was targeted for this research was 356 SMEs from Kerugoya town and its environs and a total sample of 124 respondents constituted the sample size. The study adopted a purposive sampling design to sample the owners of SMEs. The study used close-ended questions in the questions. A total of 12 owners of the SMEs was used for the pilot study. Data 1 analysis was done with the use of1SPSS Version 22 and STATA 1 software and presented using percentages, frequencies, means and 1 standard deviations. In addition, inferential statistics in form of regression and correlation analysis were used.Based on the research findings, this study 3 concludes that location of the firm, firm’s collateral, age of the firm, compliance to government regulations and firm size has significant impact on credit3access by SMEs in Kirinyaga County.The study variables understudy (location of the firm, collateral requirement, age of the firm and firm size) Accounted for 42.2% of the variations on credit access by small and medium enterprises in Kirinyaga County. Other factor accounting for 57.8% should be established and their effect investigated.