Microfinance Services and Financial Performance of Micro, Small and Medium Enterprises, in Laikipia County, Kenya
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Date
2024-06
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Publisher
Kenyatta University
Abstract
In Laikipia County, Kenya, this study aims to assess the business results of micro, medium,
and medium-sized businesses, and the microfinance services available to them. This study
was informed by four specific objectives, namely, establish the influence of micro savings
on the financial performance of MSMEs in Laikipia County, assess the role of micro
insurance on the financial performance of MSMEs in Laikipia County, assess the
contribution of micro credit on financial performance of the MSMEs in Laikipia County
and to determine the role of training services on financial performance of MSMEs in
Laikipia County. This study was informed by, Agency Theory, Finance Growth Nexus
Theory, Financial Intermediation Theory and Theory of Financial Sustainability.
Descriptive research design informed this study. The study targeted 600 registered licensed
enterprises which offer various MSMEs services. This study adopted proportionate
stratified random sampling technique through picking of various categories and classes
from the targeted MSMEs. The sample size of the study was 120 respondents. This study
used primary techniques of data collection. Primary data was collected through issuing out
of questionnaires. Inferential and descriptive statistics was used in analyzing the collected
data. Both descriptive and inferential analysis in the form of Tables and interactive figures.
Model R- Square, ANOVA Statistics and regression coefficients were generated and
interpreted for the bivariate model as well as Multiple Linear Regression Model. The
results indicates that the products of MFI (micro savings, micro credit, and training) bear
a significant strong correlation on the MSMEs financial performance while there was
relatively weak correlation between micro insurance and MSMEs financial performance.
The regression analysis shows that; micro savings, micro insurance and micro credit had a
significant impact on the MSMEs financial performance while training had no significant
implication on MSMEs financial performance. The study recommended that the MFI had
a significant responsibility of making sure that there is prudent use of credit which is a
paramount facility in business financial performance to acquire this, credits need to be
MSMEs-oriented and not product-oriented. Extensive and proper activities monitoring
need to be provided to the MSMEs who benefits from the micro credit product. MFIs need
to research into relatively profitable business lines and provided credit to MSMEs who
have the capacity in exploiting such lines of business, micro insurance is considered to be
pivotal to safeguarding them in the case of unfavorable happenings, and need to be properly
enhanced to the MSMEs and that financial training and business should be offered by the
MFIs on a regular basis and majority of the cases need to be tailored towards the MSMEs
training needs. Although this study has primarily relied on quantitative methods to
ascertain how MFI products affect MSMEs' financial performance, customized individual
responses may provide insightful data and provide a clearer picture of how MFI services
affect MSMEs' financial performance
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment for the Requirements for the Award of Master’s Degree in Business Administration (Finance Option) of Kenyatta University. June, 2024
supervisor
John Mungai Njangiru