Financial Support Services and performance of small and medium enterprises in Kericho County, Kenya
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Date
2023
Authors
Kipkorir, Kirui Michael
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Small and Medium Enterprises’ performance is crucial in the economy. It is a source of employment to over 55% Kenyan and contribute 22% of Gross Domestic Product. However, in every five Small and Medium Entrepreneurs three fails within the first three years. Some of the symptoms include lack of sufficient finance, lack business knowledge and wrong investment decisions. The research aims to examine the effect of financial support service on performance Small and Medium Enterprises in Kericho County. The specific purpose is to assess the effect of loan, establish the effect of savings, to analyze the effect of insurance, and analyze the effect of insurance on Small and Medium Entrepreneurs performance of in Kericho County. Credit theory of money, information asymmetry and financial intermediation theory were applied to explain variables in the study. Descriptive survey research design was used with target of 395 SMEs enterprises in Kericho where a sample of 199 SMEs was selected using stratification random sampling technique. Questionnaires were used for collecting data from the SMEs. Data collection was examined for consistency using Cronbach Alpha where result from a pilot attained recommended threshold of 0.7 for research instrument to be reliable. While, validity of the instrument was achieved through interrogation by supervisors. The obtained findings were depicted in charts, frequency tables, and graphs. The data was evaluated in standard deviation and means using descriptive statistics. Regression analysis was used to examine the relationship between variables. The findings indicated that SMEs were able to benefit from ease of access and flexible evaluation of loan provided by financial institution. The results also revealed that group loan and asset funding were the main financial support in access to financing for growing SMEs. Credit finance had positive significant effect on the performance of SMEs (P<0.05). SMEs have also opened saving account that have assisted them to secure, access and prudently manage funds. Financial institutions have encouraged mobile savings application that have improve saving culture among SMEs. Saving was found to have positive significant effect on performance of SMEs (P<0.05). Financial ins have tried to improve through customer relation, field monitoring progress and regular training. This have significantly improved the performance of SMEs (P<0.05). Insurance policies were available with differentiated product but there was low uptake. There was moderate flexibility and achievability of insurance premiums which assist some of the SMEs to secure their investment. Despite, few insurances product in financial, the study found that it had a positive significant influence on performance of SMEs in Kericho County (P<0.05). The study concluded that financial support in terms of credit, savings, training and insurance had positive significant effect on the performance of SMEs in Kericho County. The study recommended that financial institutions should consider supporting start-ups based on business plans. Since, existing financial product that is group loan and asset financing focus on evaluating SMEs that have grown. This is why most youth and women are disadvantaged since they have skills and knowledge but lack start-ups to start their businesses. In training and capacity building the study suggest an improve of approach from field direct contact with SMEs to digital training programmes as well as mobile training which are cheaper and effective reducing field assessment and training. The study suggested an improvement in insurance flexibility and achievable premium that would ensure low-income earners uptake their services. The study finally, suggest further research to be done on mobile financial support services that is mobile saving, mobile credit, mobile training and mobile insurance on performance of SMEs as emerging area of innovation.
Description
Financial Support Services and performance of small and medium enterprises in Kericho County, Kenya
Keywords
Financial Support Services, Performance of small and medium enterprises, Kericho County, Kenya