Firm-Specific Factors and Financing Structure among Youth-Owned Small and Medium Size Enterprises in Kiambu County, Kenya

Simple item page
dc.contributor.advisorCharity Njokaen_US
dc.contributor.authorOtieno, Vincent Ochieng
dc.date.accessioned2024-02-05T13:02:21Z
dc.date.available2024-02-05T13:02:21Z
dc.date.issued2023-11
dc.descriptionA Research Project Submitted to the School of Business Economics and Tourism in Partial Fulfilment of the Requirements for the Degree of Master of Business Administration (Finance Option) Of Kenyatta University, November 2023.en_US
dc.description.abstractIn Kiambu County, Kenya, Small and Medium Enterprises (SMEs) are integral to the economic framework, especially in fostering growth and creating employment opportunities. However, these businesses, particularly those owned by the youth, encounter significant challenges. The statistics are sobering about 60% of new enterprises fail within the first year, and roughly 40% of the survivors do not make it past the second year. This alarming failure rate highlights the necessity for a detailed understanding of the factors influencing the success and sustainability of youth-owned SMEs in the region. This study aimed to explore the firm-specific factors and financing structures of youth-owned SMEs in Kiambu County. The objectives were to analyze the impact of a firm's size on its financing structure; and to assess how a firm's growth and collateral influence its financing decisions. These factors are vital for understanding the financial strategies and sustainability of SMEs. The research was underpinned by three theories: Trade-Off Theory, Pecking Order Theory, and Resource-Based Theory. These provided a comprehensive framework for understanding the financing behavior of SMEs. Trade-Off Theory suggests a balance between the costs and benefits of debt and equity, while Pecking Order Theory posits that firms prioritize internal over external financing. Resource-Based Theory focuses on how a firm’s resources contribute to its competitive advantage. A combination of explanatory and cross-sectional study designs was employed, targeting registered youth SMEs in Kiambu County. Stratified random sampling, supplemented by Solvin’s formula, was used to ensure a representative sample. Data were collected via structured questionnaires and analyzed using SPSS v.25.0. The findings revealed that a significant number of SMEs were established with over Kes 300,000 in capital. About 55.7% of these businesses had assets valued between Kes 400,000 and 550,000. Employment figures were generally low, with 63.9% of the SMEs having 1-4 employees. Sales figures were also modest, with 66% of businesses making less than Kes 50,000 monthly. Notably, 74% of the SMEs operated without branches, and 48.5% displayed high levels of product and service development. However, 47.4% of the SMEs had low levels of ICT and financial innovation, indicating an area for potential growth. The study also shed light on the ownership and financial behaviors of these SMEs. About 29.9% were partnerships, and 73% of the business owners had formal employment, with most earning between Kes 60,000 and 90,000 monthly. Savings contributions were low, with 38.1% saving less than Kes 1000 per month. Delay in financial obligations was reported by 33% of respondents, while 88.7% had never been listed on the Credit Reference Bureau. Household items were used as collateral by 41.2% of the SMEs. Contrary to conventional wisdom, the study found no significant correlation between the size of a company and its financing structure among youth-owned SMEs. Similarly, growth and collateral's influence on financing were insignificant. These findings suggest a need for SME owners to adopt strategies for consistent growth and to diversify income sources to reduce loan dependency, challenging prevailing assumptions about the role of firm-specific factors in the financing structures of youth-owned SMEs in Kiambu County.en_US
dc.description.sponsorshipKenyatta Universityen_US
dc.identifier.urihttps://ir-library.ku.ac.ke/handle/123456789/27542
dc.language.isoenen_US
dc.publisherKenyatta Universityen_US
dc.subjectFirm-Specific Factorsen_US
dc.subjectFinancing Structureen_US
dc.subjectYouthen_US
dc.subjectSmall and Medium Size Enterprisesen_US
dc.subjectKiambu Countyen_US
dc.subjectKenyaen_US
dc.titleFirm-Specific Factors and Financing Structure among Youth-Owned Small and Medium Size Enterprises in Kiambu County, Kenyaen_US
dc.typeThesisen_US
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
Firm-Specific Factors and Financing Structure among ....pdf
Size:
1.05 MB
Format:
Adobe Portable Document Format
Description:
Full text Thesis
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Item-specific license agreed upon to submission
Description:
Download
Collections
MST-Department of Accounting and Finance