Group, Business and Lender Characteristics Influencing Loan Default in Uwezo Fund by Youth Groups in Endebess Constituency, Trans-Nzoia County, Kenya
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Date
2023
Authors
Sikowa, Leonard
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Youth development funds are essential for providing youth with the resources they
need to establish their own businesses and become self-sufficient. The Kenyan
government supports thriving young businesses in the nation by means of the youth
Enterprise Fund. Despite the effort made by the government in provision of funds, the
youth owned enterprises continue to perform poorly. Increase in default has become
so rampant among the youth and this gives a justification that this study seeks to find
out Group, Business and Lender characteristics influencing loan default in uwezo
fund, a case study of youth groups in Endebess Constituency. The objectives of the
study were to ascertain the group characteristics influencing loan default in uwezo
fund, analyzing business characteristics influencing loan default in uwezo fund and
establishing lender characteristics influencing loan default in uwezo fund. The study
was anchored on Credit Risk Theory, Moral Hazardous Theory, Arbitrage Pricing
Theory and Information Sharing Theory that bring relevance to the stated study
objectives and the Dependent variable respectively. Descriptive research design was
adopted in order to explore the impact of group, business and lender characteristics on
loan default in uwezo fund among youth groups in Endebess Constituency. The
survey utilized stratified random sampling technique to select the target population.
The youth groups were divided into two strata according to activities that they
undertake represented by 54 and 24 youth groups respectively. The target population
of the study was 1,322 members from a total of 78 Youth Groups who have received
uwezo fund loan from 2014 to 2019 in Endebess Constituency, Trans-Nzoia County,
Kenya and the 10 Endebess Constituency Uwezo Fund Management Committee
members. The sample size was One Hundred and Thirty-Six (136) participants. The
study used primary data to source for information from the respondents. The
questionnaire was utilized to collect data. A pilot study was conducted to ensure
validity and reliability of research instrument. The gathered data was analyzed
through the use of SPSS version 20.0 for windows and a multiple regression model
was adopted to determine. Data presentation included charts, frequency tables,
percentages, and mean scores. Normality, multicollinearity and heteroscedasticity
tests were run prior to the actual analysis The study adhered to ethical issues. The
study found that lender, business and group characteristics influenced loan default in
Uwezo fund by youth groups in Endebess Constituency, Trans-Nzoia County, Kenya.
The study concluded that lender, business and group characteristics had a statistically
positive significant influence on loan default in Uwezo fund by youth groups in
Endebess Constituency, Trans-Nzoia County, Kenya. The study recommended that
fund management should put in place proper monitoring system to ensure that
borrowers adhere to the set-out lending policies. Fund managers should assess the
type of business the group is engaged in. The fund management should ensure that
group members are trained on proper business management to avoid loan diversion.
Description
A Research Project Submitted to the School of Business,
Economics and Tourism in Partial Fulfillment of the
Requirements for the Award of a Degree of Master of
Business Administration (Finance) of Kenyatta University
Keywords
Group, Business, Lender Characteristics, Loan Default, Uwezo Fund, Youth Groups, Endebess Constituency, Trans-Nzoia County