Relationship Lending and Access to Financial Services by SMEs in Kenya
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Date
2021-07-12
Authors
Kiring’a, Simiyu Edward
Ndede, Fredrick W. S.
Wekesa, Argan O.
Journal Title
Journal ISSN
Volume Title
Publisher
IJRBS
Abstract
Policymakers and scholars acknowledge the significance of small and medium enterprises in stirring
the economic growth and development in developing and developed economies. In spite of the generally
fast pace by which access to financial services for small and medium enterprises is being established,
significant segments of the small and medium enterprises sector do not yet benefit from the expansion.
This study, therefore, investigated the effect of relationship lending on access to financial services by
small and medium enterprises in Kenya. The study was based on credit rationing theory and
information asymmetry theory. The target population comprised 4,253 small and medium enterprises
in Kenya. A sample size of 366 SMEs was used by the study. The study adopted a multistage sampling
technique to obtain the SME respondents. Primary data was utilized and was acquired through semistructured questionnaires. Data were analyzed using descriptive and inferential statistics utilizing
Heckman two-stage regression model. The study findings showed that relationship lending had a
positive and significant effect on access to financial services among SMEs in Kenya. The study
concluded that relationship lending plays a critical role in access to financial services by SMEs in
Kenya. The study recommends that SMEs owners should strive to meet the terms and conditions
provided by lending institutions in their various financing practices while management of the lending
institutions should adopt financing practices favorable to SMEs to increase their access to financial
services.
Description
A Research Article in International Journal of Research in Business & Social Science
Keywords
Relationship Lending, Financial Services, SMEs, Kenya
Citation
Kiring'a, E., Ndede, F. W., & Wekesa, A. (2021). Relationship lending and access to financial services by SMEs in Kenya. International Journal of Research in Business and Social Science (2147-4478), 10(5), 235-244.