Credit Appraisal Procedure on Credit Accessibility among Small Scale Traders in Githurai Market, Kenya.
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Date
2024-05
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Kenyatta University
Abstract
This study examined how small-scale traders in Githurai Market, Nairobi City County, were affected by credit appraisal methods and how easy it was for them to obtain credit financing. The study aimed to investigate the impact of credit appraisal procedures on credit accessibility for small-scale traders in Githurai 45 Market, Kenya. The research objectives were to examine various factors influencing credit access, including credit history, collateral, and income stability. A mixed-methods strategy was used in the study, integrating qualitative interviews with quantitative surveys. The sample size included 169 small-scale traders and 9 financial institutions (5 banks and 4 MFIs). The quantitative findings revealed that collateral availability, credit history, and business income significantly affect access to credit for small-scale businesses. Financial institutions rely heavily on collateral and credit scores during credit appraisal. Qualitative data highlighted the challenges faced by Githurai 45 Market small-scale traders in obtaining credit and the importance of financial literacy programs, streamlined loan application procedures, and alternative credit scoring models. The study found that there is need for collaborative initiatives between financial institutions and government-backed programs to enhance credit availability for underprivileged groups and reduce information asymmetry in credit access. The research findings are supported by theories such as the Credit Channel Theory and Information Asymmetry Theory. The study recommended reviewing credit appraisal criteria to include non-traditional measures, expanding government assistance programs, improving collaboration between stakeholders, encouraging financial literacy, streamlining loan application procedures, creating alternative credit scoring models, and partnering with technology companies. Further research is needed to explore alternative financing solutions and assess the impact of financial literacy programs on small-scale traders' access to credit.
Description
A Project Proposal Submitted to the School of Business in Partial Fulfilment for the Award of Degree in Masters in Business Administration, May, 2024