EFFECT OF FINANCIAL INSTITUTIONS’ DEVELOPMENT ON ACCESSIBILITY OF CREDIT BY SMALL AND MICRO ENTERPRISES IN MOMBASA COUNTY, KENYA

Rommel Shangala Lukilah, Dr. Moses Wekesa

Abstract


The study sought to examine the effect of financial institutions’ development on the accessibility of credit by SMEs in Kenya with specific reference to Mombasa County.  The following specific objectives guided the study: to determine the effect of commercial banks’ development on accessibility of credit by SMEs in Mombasa County and to establish the effect of microfinance institutions’ development on accessibility of credit by SMEs in Mombasa County. Applying descriptive research design, the study targeted 230 SMEs operating in Mombasa Central Business District. The analyst utilized a stratified random sampling strategy where a random sample from each stratum proportionate to the population proportion was used to come up with 83 respondents. The study used a questionnaire to collect data. A pilot study was conducted using a random sample of 10 participants. Multiple regression model was specifically used to analyze the study-specific objectives and results summarized using frequency distribution tables, mean scores and standard deviations with the help of statistical package for social science (SPSS) and presented by graphs and pie charts. The results concluded that there was a positive relationship between accessibility of credit by SMEs and commercial banks’ development. The study also concluded that there was a moderate positive correlation between microfinance institutions development and accessibility of credit by SMEs. The study recommends that senior management at banks should embrace openness and disclose all the required credit information to SMEs. The study recommends Micro Finance institutions should provide long-term financial services to SMEs and consider both men and women entrepreneurs.

Keywords; Commercial Banks’ Development, Micro Finance Institutions’ Development, Accessibility of Credit


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