Fredrick W.S.NdedeArgan O. WekesaKiring’a, Simiyu Edward2023-02-082023-02-082022http://ir-library.ku.ac.ke/handle/123456789/24705A Thesis Submitted to the School of Business in Partial Fulfillment of the Requirements for the Award of the Degree of Doctor of Philosophy in Business (Finance) of Kenyatta University,June, 2022Policy makers 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. Access to financial services by small and medium enterprises from financial institutions has been decling, falling from 27% in the year 2013 to 23.4 % in the year 2015 then dropped to 17% in year 2016 and then by 2017 the success rate was only 34%. Empirical studies has failed to yield consensus on the effect of financing practices variables; relationship lending, asset based lending and financial statement lending on access to financial services. This study was therefore undertaken to investigate the effect of financing practices on access to financial services by small and medium enterprises in Kenya. The objectives of the study were; to establish the effect of relationship lending, asset based lending and financial statement lending on access to financial services by small and medium enterprises in Kenya. The study further sought to establish the mediating effect of financial literacy and moderating effect of credit information sharing on the relationship between financing practices and access to financial services. The study was based on credit rationing theory, information asymmetry theory, pecking order theory as well as financial intermediation theory. The philosophical foundation of the study was positivist. The study utilised explanatory research design. The target population comprised 4,253 small and medium enterprises in Kenya. A sample size of 366 SMEs was utilised by the study. The study adopted multistage sampling technique to obtain the SMEs respondents. Primary data was employed and acquired through semi structured questionnaires. Pilot testing was done on 37 small and medium enterprises owners. Validity of the research instruments was ensured through face and content validity. Cronbach’s Alpha with a coefficient of above 0.7 was engaged to test reliability which was considered acceptable. Diagnostic tests like Shapiro-Wilk test was used for normality test. Variance inflation factor was used to test multicollinearity and Levene test as a test for heteroscedasticity. Data was analysed using descriptive and inferential statistics. Stata software version 17 and Heckman two step selection model were applied in analysis of data. Hypotheses were tested at 95% confidence interval for acceptance or rejection. The study findings showed that relationship lending and financial statement lending had a positive and significant effect on access to financial services among small and medium enterprises in Kenya. Asset-based lending was found to have a negative and insignificant effect on access to financial services among small and medium enterprises in Kenya. The study established that financial literacy had a significant mediating effect on the relationship between financing practices and access to financial services by small and medium enterprises in Kenya. The results established that credit information sharing had insignificant moderating effect on the relationship between financing practices and access to financial services among the small and medium enterprises in Kenya. The study concluded that financing practices play a critical role in access to financial services by small and medium enterprises in Kenya. The study recommends that small and medium enterprises owners should strive to meet the terms and conditions provided by lending institutions in their various financing practices while management of lending institution should adopt financing practices favourable to small and medium enterprises to increase their access to financial services.enFinancing PracticesFinancial ServicesSmall and Medium EnterprisesKenyaThesis