Factors that limit access to formal credit by salaried borrowers at Kenya Research Institute (KEMRI) - Kilifi unit

Abstract

There are many borrower-related and lender-related factors that limit access to credit by salaried borrowers at KEMRI-Kilifi-Unit. The borrower related factors may be economic, or attitudinal. Economic factors include low employment income which has an effect on the ability to qualify for credit facilities offered by mainstream credit institutions. Attitudinal factors may include fear of borrowing especially from mainstream credit institutions. Lender related factors include the terms and conditions of credit facilities in particular the interest charged, repayment terms, security/collateral requirements and unwillingness to lend to particular classes of borrowers due to credit risk considerations.

The research methodology was descriptive in nature since the data to be collected was of personal nature. A structured questionnaire was the main data collection tool. Data was entered in Ms-Access 2003 and analyzed using SPSS and Microsoft Excel. Frequencies averages and percentages were computed and data was presented using graphs pie-charts e.t.c as may be relevant. The findings of this study indicated that the factors that limit access to credit by salaried borrowers at Kemri-Kilfi in the order of importance are interest rates, shortage of suitable credit products, security/collateral requirements and unfriendly repayment terms.