Credit Appraisal Procedure on Credit Accessibility among Small Scale Traders in Githurai Market, Kenya
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Date
2024
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Strategic Journals
Abstract
This study explored how credit appraisal methods affect credit access for small-scale traders in Githurai
Market, Nairobi City County. The primary focus was on understanding the impact of appraisal factors, such as
credit history, collateral, and income stability, on traders’ ability to secure financing. The sample included 169
small-scale traders and representatives from 9 financial institutions, including banks and microfinance
institutions. The study revealed that collateral, credit scores, and business income are key determinants of
credit access. Financial institutions tend to rely on traditional appraisal methods, making it challenging for
small-scale traders, especially those lacking collateral or a strong credit history, to obtain loans. Qualitative
findings underscored the need for financial literacy programs, simplified loan processes, and innovative credit
scoring models to improve accessibility. Additionally, the study emphasized the potential of government backed initiatives and partnerships between stakeholders to reduce information asymmetry and make credit
more accessible to underserved traders. Supported by the Credit Channel Theory and Information Asymmetry
Theory, the study recommended updating credit criteria to include non-traditional metrics, expanding
government aid, fostering stakeholder collaboration, promoting financial literacy, streamlining loan
applications, and creating partnerships with technology firms for innovative solutions. Further research is
suggested to investigate alternative financing options and the impact of financial literacy on credit access
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Citation
Chirchir, J. K., & Jagongo, A. (2024). Credit appraisal procedure on credit accessibility among small scale traders in Githurai Market, Kenya. The Strategic Journal of Business & Change Management, 11 (4), 1045 – 1165. http://dx.doi.org/10.61426/sjbcm.v11i4.3147