INFLUENCE OF MICROFINANCE LENDING ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN GATANGA SUB COUNTY OF MURANG’ACOUNTY IN KENYA
DOI:
https://doi.org/10.47941/jepm.191Keywords:
microfinance, lending, performance, small and medium enterprisesAbstract
Purpose: The purpose of the study was to assess the influence of microfinance lending on the performance of small and medium enterprises in Kenya.
Methodology: The study adopted descriptive research design. The target population was 210 Small and Medium Enterprises operating in Gatanga Sub County of Murang’a County in Kenya. A stratified random sampling technique was used in this study. Data was collected using structured questionnaires. The sample population for this study was 94 Small and Medium Enterprises operating in Gatanga Sub County. Primary data was collected through a questionnaire. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables, graphs and charts. The study used multiple regression analysis model to establish the relationship between the variables.
Results: The regression results showed that there is a positive and significant relationship between access to credit facilities and performance of SMEs as supported by a p value of 0.000 and a beta coefficient of 1.088. Results further showed that there is a positive and significant relationship between credit lending policy and performance of SMEs as supported by a p value of 0.001 and a beta coefficient of .072. In addition, results showed that there is a negative and significant relationship between interest rates and performance of SMEs as supported by a p value of 0.000 and a beta coefficient of -0.351. Lastly, results showed that there is a negative and significant relationship between collateral security and performance of SMEs as supported by a p value of 0.000 and a beta coefficient of -0.588.
Unique contribution to theory, practice and policy: The findings of this study will be useful source of reference to researchers and scholars in their research work. Further, the government of Kenya will be able to appreciate which areas of microfinance lending need improvement and, thus formulate appropriate credit policies. In addition, MFIs will be able to train their credit officers on what kind of investment opportunities are viable for Small and Medium Enterprises. Similarly, the study will facilitate the availability of information for SMES businesses on influence of microfinance lending on the performance of their businesses and how best they can get access to microfinance as well as protect them from failure.
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References
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